Same date on the calendar, Oct 19th, but different day of the week
20 years ago it was a Monday, aka "Black Monday" the day of the '87 Market Meltdown
I remember it well
I was not on the floor, nor even in New York
I was in little old Holt Michigan, but with cable TV, my old Mac and ... a VCR
Maybe the tape is too old now, but I watched it several times, about 6hours of the old FNN (Financial news Network, the precursor of CNBC).
So what happened?
Not well covered is the impact of Mr. David Ruder, Chairman of the SEC.
(note that he was only in office for a matter of months)
The markets were trending down, there were issues with valuation, an ongoing "spat" with Europe etc.
But there was a key element ... actions and words of the SEC Chair
A week or two earlier, to a group of bond managers/traders, either as a comment or response to a question, Mr. Ruter indicated that , in the case of market turmoil, the SEC would consider closing the exchanges.
This caused a sell off in the bond market
This was not widely covered in the press, but was know on the street.
What did it mean?
Analogy: You are waiting in line for a movie and the management announces that "in case of fire, we will lock the doors"
Huh?
Are you going to the movie or go have a beer?
Well on Monday, October 19, 1987, the markets were headed down, but was starting to recover.
Mr. Ruter was interviewed. He made a similar statement.
Word spread and any buyers said ... whoa ... I'm pulling my bid.
Market plunged
Then the market started to recover, and the quote was carried on another newswire
Once again ... bids were pulled
Buyers strike
Many other events were triggered
"program trading" triggered additional selling
Paper transaction couldn't keep pace, trades were reported 10-15-30 min late
Banks shut their lending windows to specialists, rumors spread
Panic
But the key element was the threat to close the markets - to lock the doors
And the rest is history
It was a good time to buy
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