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Black Monday: The 1987 Stock Market Crash

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The term ‘Black Monday’ was used in the financial world to describe the infamous Wall Street stock market crash that happened on the 19th of October 1987.

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Black Monday: The 1987 Stock Market Crash

  1. 1. BLACK MONDAY: THE 1987 STOCK MARKET CRASH The term ‘Black Monday’ was used in the financial wor- ld to describe the infamous Wall Street stock market crash that happened on the 19th of October 1987.
  2. 2. 2 Thibaut De Roux On this day, the Dow Jones Industrial Average fell by approximately $500 billion, or 22% of the overall value of the companies in the index. Due to time zone differences, this crash is known as Black Tuesday in Australia and New Zealand. $500billion or 22%
  3. 3. 3Thibaut De Roux Causes of the Crash Stock Market Crash of 1929 This spectacular market crash occurred because investors panicked. The demand for stock was suddenly far lower than the supply, re- sulting in investors selling off stock at lower prices in fear that these prices would only drop further if they held onto their assets. Pro- gram trading was also to blame, as automated trading mechanisms were programmed to place stop-loss orders after certain thresholds were crossed in the stock market. Black Monday and Black Tuesday can also refer to another stock mar- ket crash which occurred in 1929, on the 28th and 29th of October. Black Monday is an extreme example of market volatility and how investor confidence affects this.
  4. 4. You can learn more about the difference between volatility and risk by visiting the blog of Thibaut De Roux.

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