Black Monday – the stock market crash October 19, 1987
On October 19, 1987, the stock market went through "… the biggest day of the stock market crash history". The Dow was down $ 500 billion, or 22.6%. In addition, the Nasdaq Composite Index fell 11.3%, the S & P 500 index fell 20.5%. The crash began in 1982 with a bullish bull market characterized by M & A fanaticism, hostile takeovers and leveraged buyouts. In order to raise capital to carry out corporate acquisitions, the company issues junk bonds (high-risk bonds, high returns) and initial public offerings (IPO). In the 1980s, micro-computer technology flourished. These advances glorify investors in many economic opportunities for many companies.
Unfortunately, in early 1987, the Securities and Exchange Commission (SEC) began investigating illegal trading activities and fraudulent IPOS. Investors to buy and sell huge economic growth prompted the Fed short-term rate hike. Raising interest rates leads brokers to use portfolio insurance. Unfortunately, brokers will now benefit from a market crash. The market has become unstable and people are trying to sell it in a crazy way, but because of the market instability, no one wants to buy stocks. This is a downward spiral. As a result, the Fed lowered the short-term interest rate, thus marking the market's recovery, by repurchasing the company's own shares, underestimated.
Another factor that leads to Black Monday is derivative securities, including index options and future markets, buying and selling. The inability of real and derivatives markets to keep pace is a factor in the collapse. Large-scale computer transactions are another factor in which a large number of shares are planned to be purchased when the computer detects some existing market trends. Another factor is the lack of liquidity in stocks, when a large number of people want to sell the stock, but did not find a buyer. Another factor is the large US trade deficit. The deficit weakened the dollar and effectively led to the withdrawal of foreign investors. The high return on long-term US bond investments has led to fewer people willing to take risks in the market. A few months before the collapse of the stock overestimation may or may not be a black Monday collapse of a factor.
However, one of the biggest benefits of the stock market crash in history is the establishment of a circuit breaker system that now prevents stocks from trading when stocks are heavily devalued in a day. In addition, a clear difference between Black Monday and the 1927 stock market crash is that the United States underwent a record rupture recovery a few days after the big spiral fell. In addition, in 2 years, the market in the black Monday completely restored to the status quo.
Unfortunately for the Black Monday, the US is not the only one affected by the economy. Black Monday also had a negative impact on the international market. Some of the causes of the explosion include rapid increases in short- and long-term interest rates, an increase in US government debt, a decline in the value of the dollar relative to foreign currencies, a reduction in the US current account deficit, a low dividend yield, high price-earnings ratios and a bull market characterized by optimistic investors .
Black Monday and also the biggest stock market crash that happened Monday, September 29, 2008, created In a strict economy, lenders are less likely to lend to unattractive borrowers. If you or someone you know is in the market for cars, mortgages, credit lines or other installments or revolving credit accounts, but because of a low credit score or poor credit history due to inaccuracies, misleading or contained in a credit history Please call toll free at 800-508-0041 or visit the CreditLawGroup Credit Repair [http://www.creditlawgroup.com] website.