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Vanguard Founder John Bogle Reflected on Black Monday: Rewind

The investing icon said the damage done to the U.S. markets on Black Monday happened late in the day, but 24 hours later the panic was over.

On Oct. 19, 1987, as the Dow Jones Industrial Average plummeted 22.6% in a single trading session, Vanguard Group founder John Bogle was sitting in an investment committee meeting for a charitable organization.

"I didn't really realize what happening until I got home after 6:30," Bogle told TheStreet last year. "But by that time, it was all over the news. Everybody seemed to be in sort of a state of panic."

The day would become known as "Black Monday," the first contemporary global financial crisis, in which a chain reaction of market distress sent stock exchanges around the world plunging in a matter of hours, according to the Federal Reserve. Before the U.S. markets opened for trading on Monday, the Asian markets began tumbling. Bogle said that the "big damage" in the U.S. market was "done pretty late in the day."

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"The next day, I thought the most useful thing I could do was find out how the shareholders were actually feeling," said Bogle. "The heck with all the data. Let's talk to some real-life human beings and see how they react."

After speaking with about 104 investors, however, Bogle was convinced that the panic was over.

"The industry proved to be quite resilient and shareholders were quite resilient too," said Bogle, adding that for the year as a whole, the Standard & Poor's was up in 1987.

The Vanguard founder said that Black Monday serves as a "wonderful reminder" to investors that stock markets and stocks have risk and can oscillate up and down. He added that even if stocks are down, they don't stay down forever.

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