Entri Blog
No Result
View All Result
Friday, September 22, 2023
  • State PSC
    • Kerala PSC
      • Kerala PSC Exams
      • Kerala PSC Notification
      • Kerala PSC Exam Calender
      • Kerala PSC Previous Question papers
      • KAS Exam
      • KAS Previous Year Question papers
      • Kerala PSC VEO Notification
      • Kerala Police SI
      • Kerala PSC LDC Notification
      • Kerala PSC LP/UP Assistant
      • Kerala PSC Village Field Assistant Notification
      • Kerala PSC LD Typist Notification
      • Kerala PSC Food Safety Officer
      • Kerala PSC Excise Inspector Notification
      • Kerala PSC BDO Notification
      • Kerala PSC CPO Notification
      • Kerala PSC LGS Notification
    • TNPSC
    • APPSC
    • TSPSC
    • BPSC
    • Karnataka PSC
    • MPPSC
    • UPPSC
  • Banking
    • IBPS PO Notification
    • IBPS Clerk Notification
    • SBI PO Notification
    • SBI Clerk Notification
    • SBI SO Notification
    • SBI Apprentice Notification
    • Canara Bank PO Notification
    • Indian Bank PO Notification
    • RBI Assistant Notification
    • RBI Office Attendant Notification
    • IBPS RRB Notification
    • IBPS RRB Office Assistant Notification
  • Govt Exams
    • Railway
    • SSC
  • Skilling
    • Coding
    • Spoken English
    • Stock Marketing
  • Courses
    • Data Science Course
      • Data Science Malayalam
      • Data Science Training in Kochi
      • Data Science Training in Trivandrum
      • Data Science Course in Calicut
      • Data Science Training in Thrissur
    • Full Stack Developer Course
      • Full Stack Development Malayalam
      • Full Stack Development Hindi
      • Full Stack Development Tamil
      • Full Stack Development Telugu
      • Full Stack Development Kannada
    • Stock Market Course
      • Stock Market Course in Malayalam
      • Stock Market Course in Tamil
      • Stock Market Course in Kannada
      • Options Trading Course
    • Spoken English Course
      • Spoken English Course in Malayalam
      • Spoken English Course in Hindi
      • Spoken English Course in Telugu
      • Spoken English Course in Tamil
      • Spoken English Course in Kannada
    • Python Programming Course
    • Quantity Surveying Course
    • Performance Marketing Course
    • Practical Accounting Course
      • Tally Course
      • Taxation Course
      • UAE Accounting
      • GST Course
    • Mern Stack Developer Course
      • Full Stack Developer Course in Kochi
      • Full Stack Developer Course in Trivandrum
      • Full Stack Developer Course in Calicut
      • Full Stack Developer Course in Pune
      • Full Stack Developer Course in Bangalore
      • Full Stack Developer Course in Hyderabad
      • Full Stack Developer Course in Chennai
      • Full Stack Developer Course in Coimbatore
      • Full Stack Developer Course in Indore
      • Full Stack Developer Course in Jaipur
    • Other Courses
      • Montessori Teacher Training
      • MEP Course
      • German Language Course
      • OET Coaching
      • Nurses Recruitment Abroad
      • Digital Marketing Training
      • ChatGPT Course
      • Forex Trading Course
      • Yoga Teacher Training Course
  • Others
    • GATE
    • MAT
    • KMAT
    • UPSC
    • TET
      • APTET
      • CTET
      • DSSSB
      • Karnataka TET
      • Kerala TET
      • KVS
      • MPTET
      • SUPER TET
      • TNTET
      • TSTET
      • UPTET
  • Aptitude Questions
Spoken English
Entri Blog
  • State PSC
    • Kerala PSC
      • Kerala PSC Exams
      • Kerala PSC Notification
      • Kerala PSC Exam Calender
      • Kerala PSC Previous Question papers
      • KAS Exam
      • KAS Previous Year Question papers
      • Kerala PSC VEO Notification
      • Kerala Police SI
      • Kerala PSC LDC Notification
      • Kerala PSC LP/UP Assistant
      • Kerala PSC Village Field Assistant Notification
      • Kerala PSC LD Typist Notification
      • Kerala PSC Food Safety Officer
      • Kerala PSC Excise Inspector Notification
      • Kerala PSC BDO Notification
      • Kerala PSC CPO Notification
      • Kerala PSC LGS Notification
    • TNPSC
    • APPSC
    • TSPSC
    • BPSC
    • Karnataka PSC
    • MPPSC
    • UPPSC
  • Banking
    • IBPS PO Notification
    • IBPS Clerk Notification
    • SBI PO Notification
    • SBI Clerk Notification
    • SBI SO Notification
    • SBI Apprentice Notification
    • Canara Bank PO Notification
    • Indian Bank PO Notification
    • RBI Assistant Notification
    • RBI Office Attendant Notification
    • IBPS RRB Notification
    • IBPS RRB Office Assistant Notification
  • Govt Exams
    • Railway
    • SSC
  • Skilling
    • Coding
    • Spoken English
    • Stock Marketing
  • Courses
    • Data Science Course
      • Data Science Malayalam
      • Data Science Training in Kochi
      • Data Science Training in Trivandrum
      • Data Science Course in Calicut
      • Data Science Training in Thrissur
    • Full Stack Developer Course
      • Full Stack Development Malayalam
      • Full Stack Development Hindi
      • Full Stack Development Tamil
      • Full Stack Development Telugu
      • Full Stack Development Kannada
    • Stock Market Course
      • Stock Market Course in Malayalam
      • Stock Market Course in Tamil
      • Stock Market Course in Kannada
      • Options Trading Course
    • Spoken English Course
      • Spoken English Course in Malayalam
      • Spoken English Course in Hindi
      • Spoken English Course in Telugu
      • Spoken English Course in Tamil
      • Spoken English Course in Kannada
    • Python Programming Course
    • Quantity Surveying Course
    • Performance Marketing Course
    • Practical Accounting Course
      • Tally Course
      • Taxation Course
      • UAE Accounting
      • GST Course
    • Mern Stack Developer Course
      • Full Stack Developer Course in Kochi
      • Full Stack Developer Course in Trivandrum
      • Full Stack Developer Course in Calicut
      • Full Stack Developer Course in Pune
      • Full Stack Developer Course in Bangalore
      • Full Stack Developer Course in Hyderabad
      • Full Stack Developer Course in Chennai
      • Full Stack Developer Course in Coimbatore
      • Full Stack Developer Course in Indore
      • Full Stack Developer Course in Jaipur
    • Other Courses
      • Montessori Teacher Training
      • MEP Course
      • German Language Course
      • OET Coaching
      • Nurses Recruitment Abroad
      • Digital Marketing Training
      • ChatGPT Course
      • Forex Trading Course
      • Yoga Teacher Training Course
  • Others
    • GATE
    • MAT
    • KMAT
    • UPSC
    • TET
      • APTET
      • CTET
      • DSSSB
      • Karnataka TET
      • Kerala TET
      • KVS
      • MPTET
      • SUPER TET
      • TNTET
      • TSTET
      • UPTET
  • Aptitude Questions
No Result
View All Result
Entri Blog
Spoken Eng
  • HTML Tutorial
  • DSA Tutorials
  • Tutorials in Hindi
    • HTML Tutorial for Beginners in Hindi
    • Python Tutorial for Beginners in Hindi
    • GIT and GITHUB Tutorial for Beginners in Hindi
  • Tutorials in Tamil
    • JavaScript Tutorial in Tamil
  • Tutorials in Telugu
    • HTML Tutorial For Beginners in Telugu
    • CSS Tutorial for Beginners in Telugu
    • Bootstrap Tutorial for Beginner in Telugu
  • Tutorials in Kannada
    • HTML Tutorial For Beginners in Kannada
banner top article banner top article
Home Articles

What Caused Black Monday in 1987? Know Its Effects

by Ayesha Surayya
April 3, 2023
in Articles, Entri Skilling, Stock Marketing
What Caused Black Monday in 1987 Know Its Effects
Share on FacebookShare on WhatsAppShare on Telegram

Table of Contents

  • Black Monday: A Day of Crash
  • How Did Black Monday Actually Happen?
  • What Caused The Black Monday Crash? Theoretical conspiracy
  • What is the genuine reason that caused the Black Monday Crash?
  • FAQs of Back Monday

“Black Monday” took place on October 19 (Monday) in 1987. On this day, stock markets around the world crashed, though the event didn’t happen all at once. Black Monday saw the biggest one-day percentage drop in U.S. stock market history. What Caused Black Monday in 1987? Know Its Effects by reading below

Learn Stock Marketing with Share Trading Expert! Explore Here!

Black Monday: A Day of Crash

In the United States, the stock market plummeted by more than 20% on October 19, 1987, but the effects of the Black Monday crash varied wildly from country to country. Hong Kong, Singapore, and Australia were hit especially hard, with falls of more than 40%, while Austria scraped by with only an 11.4% decline.

This led to a correspondingly variable response to the crash, depending on just how much of a hit the country in question had taken. For example, the central banks of the United States, Japan, and Germany took bold steps to help their economies recover, while the Reserve Bank of New Zealand, whose stock market had only seen a 15% drop on Black Monday (or Black Tuesday, in their time zone), opted not to relax their monetary policies. As a result, by February, their market had lost more than half of its value, and the crash ended up contributing greatly to the ensuing six-year recession in New Zealand.

With stock prices around the world in a free fall, the worldwide losses from Black Monday were staggering.

How Did Black Monday Actually Happen?

Some imminent warning signs for investors were evident in the trading days just prior to what would turn out to be the Black Monday. On October 14, the Dow experienced a major decline of nearly 4%. It dropped another 2.5% the following day.

Learn the basics of Stock Marketing with Share Trading Expert! Join today!

And the day after that, October 16, the Friday before Black Monday, saw a devastating 5% loss in London stock markets that, ominously, coincided with the Great Storm of 1987, an unprecedented severe weather phenomenon that produced hurricane-force winds in the English Channel and resulted in nearly two dozen fatalities.

On Monday morning, the crash started in Hong Kong. The crash continued throughout all of Asia and all during the Asian trading session, as other markets began to feel the “aftershocks” of the initial crash. The market carnage continued, spreading throughout Europe when the London market session opened.

By the time the stock markets in U.S. opened, stocks were virtually in freefall. By the end of the day, the DJIA had dropped by more than 500 points and the S&P 500 by more than 55 points.

What Caused The Black Monday Crash? Theoretical conspiracy

In the years following Black Monday, conspiracy theories have popped up to explain the mysterious failure of the complicated market. The most widespread theory suggests that a small, elite group controls the global economy through some vague combination of wealth and witchcraft. It has been claimed that, when trade slowed on Black Monday, the members of this elite mystery group manipulated the numbers behind the scenes to make it look like the market was on the rise when it wasn’t.

Some conspiracy theorists have connected Black Monday to the Iran-Contra affair, in which the U.S. was busted selling weapons to Iran and using the funds to support Nicaraguan contras, because hearings related to the event began just before the crash.

Although the Secret Global Supervillains theory is the most popular, it’s far from the only one. Others believe that the Great Storm of 1987, which did blow down more than 15 million trees in England and flood the timber market, blew down the stock market .

What is the genuine reason that caused the Black Monday Crash?

Unfortunately, the factors economists cite to explain Black Monday are more mundane. According to them, it was primarily the newly instituted portfolio insurance and the computer trading models that controlled it that sparked investor panic.

1. Computerized or “program” trading

The other culprit pinpointed as contributing to the severe crash was computerized trading. Computer, or “program trading,” was still relatively new to the markets in the mid-1980s. The use of computers enabled brokers to place larger orders and implement trades more quickly. In addition, the software programs developed by banks, brokerages, and other firms were set to automatically execute stop-loss orders, selling out positions, if stocks dropped by a certain percentage.

On Black Monday, the computerized trading systems created a domino effect, continually accelerating the pace of selling as the market dropped, thus causing it to drop even further. The avalanche of selling that was triggered by the initial losses resulted in stock prices dropping even further, which in turn triggered more rounds of computer-driven selling.

2. A bull market due for a correction

Many market analysts theorize that the Black Monday crash of 1987 was largely driven simply by a strong bull market that was overdue for a major correction. 1987 marked the fifth year of a major bull market that had not experienced a single major corrective retracement of prices since its inception in 1982. Stock prices had more than tripled in value in the previous four and a half years, rising by 44% in 1987 alone, prior to the Black Monday crash.

3. Portfolio insurance

A third factor in the crash was “portfolio insurance,” which, like computerized trading, was a relatively new phenomenon at the time. Portfolio insurance involved large institutional investors partially hedging their stock portfolios by taking short positions in S&P 500 futures. The portfolio insurance strategies were designed to automatically increase their short futures positions if there was a significant decline in stock prices.

Portfolio insurance was designed to protect a portfolio against market risks by using short-sale stock index futures to maintain a balance, but in the late ’80s, stock trading was still done the old-fashioned way.

Concerns about oil prices, interest rates, inflation, and trade deficits created warning signs of increased volatility and some occasional severe down days in the market prior to Black Monday in October. However, in the end, the most likely cause of the 1987 crash was just the fact that markets did not just move straight up indefinitely.

Master stock trading with us. Enroll now for a free demo!

FAQs of Back Monday

  1. Did people lose money on Black Monday?

Ans. Yes. Black Monday caused about $500 billion in losses when the Dow Jones Industrial Index fell 508 point.

  1. How long did 1987 crash last?

Ans. The stock market crash of 1987 was a rapid and severe downturn in U.S. stock prices that occurred over several days in late October 1987. While the crash originated in the U.S., the event impacted every other major stock market in the world.

  1. What day is known as Black Monday?

Ans. Just as the stock market crash of October 28, 1929, has forever come to be remembered as “Black Tuesday,” so October 19, 1987, has come to be known as “Black Monday.”

Important links

Understanding stock market trends and patterns The impact of technology on the stock market
Trading strategies for different market conditions The impact of macroeconomic events
 Diversification in Portfolio Management Top 15 Chart Patterns Every Trader Needs to Know
Intraday Options trading – Tips, Rules, Strategies Impact of global events on the Indian Stock Market

 

Share62SendShare

Ayesha Surayya

Related Posts

Kerala PSC Draftsman Grade 2 Admit Card 2023: Download Link, PDF
Admit Card

Kerala PSC Draftsman Grade 2 Admit Card 2023: Download Link, PDF

September 8, 2023
Kerala PSC Typist Rank List 2023: Download PDF, Direct Link
Articles

Kerala PSC Typist Rank List 2023: Download PDF, Direct Link

September 8, 2023
Prepare for OET in 6 months
Articles

Prepare for OET in 6 months

September 7, 2023
Next Post
UPSC Physical Eligibility

UPSC Physical Eligibility 2023: Check Here

Discussion about this post

Explore More

  1. Impact of Global Events on the Indian Stock Market
  2. Differences between Rights Shares and Bonus Shares
  3. Indian vs US Stock Market
  4. Difference Between Stock Market And Share Market
  5. How are Stocks Different from Other Investments?
  6. Intraday Option Trading – Strategies
  7. 15 Candlestick Patterns
  8. The Impact of Technology on the Stock Market
  9. Problems of Stock Exchange Listing
  10. What Are Different Types Of Stocks?
  11. How do Mergers and Acquisitions Affect Stock Prices?
  12. What is Short Selling in Stock Market?
  13. How to Trade Options: Strategies for Beginners

Different Trading Courses

  1. Stock Market Courses in Malayalam
  2. Stock Market Courses in Tamil
  3. Stock Market Courses in Kannada
  4. Online Options Trading Course
  5. Forex Trading Course

Courses

  • Data Science Course
  • Full Stack Developer Course
  • Data Science Course in Malayalam
  • Full Stack Developer Course in Malayalam
  • Full Stack Developer Course in Hindi
  • Full Stack Developer Course in Tamil
  • Full Stack Developer Course in Telugu
  • Full Stack Developer Course in Kannada
  • Python Programming Course
  • Practical Accounting Course
  • Quantity Surveying Course
  • Stock Market Course
  • Stock Market Course in Malayalam
  • Stock Market Course in Tamil
  • Stock Market Course in Kannada
  • Options Trading Course

Company

  • Become a teacher
  • Login to Entri Web

Spoken English Courses

  • Spoken English Course
  • Spoken English Course in Malayalam
  • Spoken English Course in Hindi
  • Spoken English Course in Tamil
  • Spoken English Course in Telugu
  • Spoken English Course in Kannada
  • Spoken English Course for Housewives
  • Spoken English Course for Working Professionals
  • Spoken English Course for School Students
  • Spoken English Course for College Students
  • Spoken English Course for Job Seekers
  • AI Powered Spoken English Course

Quick Links

  • Aptitude Questions
  • Articles
  • Videos
  • Entri Daily Quiz Practice
  • Current Affairs & GK
  • News Capsule – eBook
  • Preparation Tips
  • Kerala PSC Gold
  • Entri Skilling
  • Kerala PSC

Other Courses

  • OET Coaching Classes
  • Nurse Recruitment Abroad
  • Forex Trading Course
  • Montessori Teachers Training
  • Performance Marketing Course
  • German Language Course
  • MEP Course

Popular Exam

  • IBPS Exam
  • SBI Exam
  • Railway RRB Exam
  • Kerala PSC
  • Tamil Nadu PSC
  • Telangana PSC
  • Andhra Pradesh PSC
  • MPPSC
  • UPPSC
  • Karnataka PSC
  • Staff Selection Commission Exam

© 2021 Entri.app - Privacy Policy | Terms of Service

No Result
View All Result
  • State PSC
    • Kerala PSC
      • Kerala PSC Exams
      • Kerala PSC Notification
      • Kerala PSC Exam Calender
      • Kerala PSC Previous Question papers
      • KAS Exam
      • KAS Previous Year Question papers
      • Kerala PSC VEO Notification
      • Kerala Police SI
      • Kerala PSC LDC Notification
      • Kerala PSC LP/UP Assistant
      • Kerala PSC Village Field Assistant Notification
      • Kerala PSC LD Typist Notification
      • Kerala PSC Food Safety Officer
      • Kerala PSC Excise Inspector Notification
      • Kerala PSC BDO Notification
      • Kerala PSC CPO Notification
      • Kerala PSC LGS Notification
    • TNPSC
    • APPSC
    • TSPSC
    • BPSC
    • Karnataka PSC
    • MPPSC
    • UPPSC
  • Banking
    • IBPS PO Notification
    • IBPS Clerk Notification
    • SBI PO Notification
    • SBI Clerk Notification
    • SBI SO Notification
    • SBI Apprentice Notification
    • Canara Bank PO Notification
    • Indian Bank PO Notification
    • RBI Assistant Notification
    • RBI Office Attendant Notification
    • IBPS RRB Notification
    • IBPS RRB Office Assistant Notification
  • Govt Exams
    • Railway
    • SSC
  • Skilling
    • Coding
    • Spoken English
    • Stock Marketing
  • Courses
    • Data Science Course
      • Data Science Malayalam
      • Data Science Training in Kochi
      • Data Science Training in Trivandrum
      • Data Science Course in Calicut
      • Data Science Training in Thrissur
    • Full Stack Developer Course
      • Full Stack Development Malayalam
      • Full Stack Development Hindi
      • Full Stack Development Tamil
      • Full Stack Development Telugu
      • Full Stack Development Kannada
    • Stock Market Course
      • Stock Market Course in Malayalam
      • Stock Market Course in Tamil
      • Stock Market Course in Kannada
      • Options Trading Course
    • Spoken English Course
      • Spoken English Course in Malayalam
      • Spoken English Course in Hindi
      • Spoken English Course in Telugu
      • Spoken English Course in Tamil
      • Spoken English Course in Kannada
    • Python Programming Course
    • Quantity Surveying Course
    • Performance Marketing Course
    • Practical Accounting Course
      • Tally Course
      • Taxation Course
      • UAE Accounting
      • GST Course
    • Mern Stack Developer Course
      • Full Stack Developer Course in Kochi
      • Full Stack Developer Course in Trivandrum
      • Full Stack Developer Course in Calicut
      • Full Stack Developer Course in Pune
      • Full Stack Developer Course in Bangalore
      • Full Stack Developer Course in Hyderabad
      • Full Stack Developer Course in Chennai
      • Full Stack Developer Course in Coimbatore
      • Full Stack Developer Course in Indore
      • Full Stack Developer Course in Jaipur
    • Other Courses
      • Montessori Teacher Training
      • MEP Course
      • German Language Course
      • OET Coaching
      • Nurses Recruitment Abroad
      • Digital Marketing Training
      • ChatGPT Course
      • Forex Trading Course
      • Yoga Teacher Training Course
  • Others
    • GATE
    • MAT
    • KMAT
    • UPSC
    • TET
      • APTET
      • CTET
      • DSSSB
      • Karnataka TET
      • Kerala TET
      • KVS
      • MPTET
      • SUPER TET
      • TNTET
      • TSTET
      • UPTET
  • Aptitude Questions

© 2021 Entri.app - Privacy Policy | Terms of Service