Twenty Years After Black Monday: Similar and Very Different
There are some eerie similarities between Oct. 19, 1987 and today: saber-rattling by the Iranians, a two-term Republican president nearing the end of his term and a network television news media voicing warnings of doom and gloom.
âItâs a day that will be in bold print in history books â Black Monday, October 19th, 1987, when the stock market went into a freefall, losing more in one day than it did on Black Tuesday in 1929,â anchor Tom Brokaw said on the Oct. 19, 1987, NBC âNightly News.â âAnd while conditions are much stronger now than they were then, todayâs precipitous plunge struck fear in the hearts and pocketbooks of even Wall Street veterans.â
The Initial Reaction
There was a lot of uncertainty the hours following the close of the stock mark after the 508-point 22.62-percent drop in the Dow Jones Industrial Average.
â[N]ow some analysts argue that the stock marketâs recent activity is heading for recession, if not depression in the 1990s,â said CNN correspondent Mark Left on the Oct. 19, 1987, CNN âPrimeNews.â
Of course, the
âIsnât there a problem that there seems to be a lack of political and economic coherence in
The Media and the Days After
By Tuesday, TV anchors had a more positive tone in the coverage.
â[I]nvestors began to move quite deliberately away from the edge of the cliff and when the bell rang today, the Dow Jones Industrial Average had actually posted a record rise,â said ABC âWorld News Tonightâ anchor Peter Jennings on his Oct. 20, 1987, broadcast. âIt only represented about a fifth of Mondayâs loss and it wasnât the whole story, but it wasnât yesterday.â
The End of the World that Never Came
Despite the frayed nerves and up-to-the-minute alerts from the media offering to tell viewers of any disastrous economic fallout from the crash, the markets recovered and the second coming of the Great Depression never occurred.
â[A] lot of people not knowing for sure where this market will go today,â Brokaw said on an NBC âSpecial Report,â following the opening of the stock market on Oct. 20, 1987. âBut, at least it started on an up note â where it will end, only time will tell.â
âIf you had invested $1,000 in the S&P 500 index at the close of trading on Oct. 19, 1987, and reinvested your dividends, today you would have nearly $10,800, according to S&P's Howard Silverblatt,â Kathleen Pender wrote.
The Coverage 20 Years Later
Barronâs financial weeklyâs cover asked that question on October 15: âBlack Monday âŚ Why Wall Street doesnât think it can recur.
âCBS Evening Newsâ actually compared 1987 and 2007 prompting correspondent Alexis Christoforous to say, âCan it happen again? It could.â
But experts are not as worried as Christoforous and Barronâs. Unlike some in the media, âHardly anyone is thinking aboutâ the crash of 1987, according to Phil Roth (quoted by The Wall Street Journal on October 15). Roth is a chief technical market analyst at the brokerage firm Miller Tabak.
That Wall Street Journal article, by E. S. Browning, also disagreed with assertions that stocks are âovervalued,â one of the triggers of the 1987 crash.
âStocks donât look as overpriced today as they did in 1987. Today, the companies in the Standard & Poor's 500-stock index trade only a little above the historical average of 16 times profits for the past 12 months. In 1987, the S&P 500 was at more than 20 times profits.â