AZnomicsBlack Monday
October 19, 1987
Bull market roaring. "Reagan's economy" booming. Trade deficit widening.
🔍 Why Did This Happen?
Automated computer programs designed to "protect" portfolios automatically sold stocks when prices fell. When all programs did this simultaneously, they created a selling spiral no human could stop.
🔄 What Happened Next
Policy changes, recovery milestones, and lasting lessons
NYSE installs automatic trading halts when markets fall too far too fast — giving humans time to override panicking machines.
The President's Working Group on Financial Markets (nicknamed "Plunge Protection Team") created to coordinate crisis response.
Dow surpasses its 1987 peak. No recession followed — the real economy was sound. This was a market failure, not an economic one.
New rules limit certain automated trading strategies and require better disclosure of algorithmic positions.