On Oct. 19, 1987 -- Black Monday -- the stock market tanked. The Dow Jones Industrial Average fell over 500 points -- a 22% decline.

But more than 30 years removed from the epic crash its hard for some, especially younger folks, to understand the severity of that day and the risks associated with major stock market crashes (other than the evaporation of wealth).

The crash was triggered for a few reasons. But one of them was legislation from Congress that would limit the tax savings that companies would receive after merging. So companies would have less of an incentive to merge.

The legislation was unveiled the week before Black Monday, causing the stock market to drop. Regulation tends to make investors nervous.

But on Monday, the selling kicked into high gear thanks to computer trading, which would automatically push investors into cash positions and sell their stock holdings anytime the market declined.

Imagine what happens when almost everyone is employing this strategy? Pure mayhem!

Now that you've had your #FlashBlackFriday, figure out how to navigate today's markets via our Trading Strategies roundtable.

 

More from Video

Abbott Downing Exec: 'There's a Missed Perception That Volatility Means Risk'

Abbott Downing Exec: 'There's a Missed Perception That Volatility Means Risk'

Jim Cramer to Elon Musk: 'No Lawyer in the World Would Say You Should Do This'

Jim Cramer to Elon Musk: 'No Lawyer in the World Would Say You Should Do This'

Abbott Downing Executive on New Years Resolutions for Investors

Abbott Downing Executive on New Years Resolutions for Investors

Jim Cramer: Why Uber and Lyft IPOs Are Bad for the Market

Jim Cramer: Why Uber and Lyft IPOs Are Bad for the Market

What Investors Need to Know About the Brexit Deal

What Investors Need to Know About the Brexit Deal