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.
â€śItâ€™s 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€ť anchor Tom Brokaw said on the Oct. 19, 1987, NBC â€śNightly News.â€ť â€śAnd while conditions are much stronger now than they were then, todayâ€™s precipitous plunge struck fear in the hearts and pocketbooks of even Wall Street veterans.â€ť
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€ś[N]ow some analysts argue that the stock marketâ€™s recent activity is heading for recession, if not depression in the 1990s,â€ť said CNN correspondent Mark Left on the Oct. 19, 1987, CNN â€śPrimeNews.â€ť
Of course, the
â€śIsnâ€™t 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€ś[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€ť said ABC â€śWorld News Tonightâ€ť anchor Peter Jennings on his Oct. 20, 1987, broadcast. â€śIt only represented about a fifth of Mondayâ€™s loss and it wasnâ€™t the whole story, but it wasnâ€™t yesterday.â€ť
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€ś[A] lot of people not knowing for sure where this market will go today,â€ť Brokaw said on an NBC â€śSpecial Report,â€ť following the opening of the stock market on Oct. 20, 1987. â€śBut, at least it started on an up note â€“ where it will end, only time will tell.â€ť
â€śIf 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€ť Kathleen Pender wrote.
The Coverage 20 Years Later
Barronâ€™s financial weeklyâ€™s cover asked that question on October 15: â€śBlack Monday â€¦ Why Wall Street doesnâ€™t think it can recur.
â€śCBS Evening Newsâ€ť actually compared 1987 and 2007 prompting correspondent Alexis Christoforous to say, â€śCan it happen again? It could.â€ť
But experts are not as worried as Christoforous and Barronâ€™s. Unlike some in the media, â€śHardly anyone is thinking aboutâ€ť 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 â€śovervalued,â€ť one of the triggers of the 1987 crash.
â€śStocks donâ€™t 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€ť