The 1987 stock market crash, better
known as Black Monday, was a statistical anomaly, often referred to as a Black
Swan event. Unlike other market declines, investors seem to be under the false premise
that the stock market in 1987 provided no warning of the impending crash. The
unique characteristics of Black Monday, the magnitude and instantaneous nature
of the drop, has relegated the event to the “could never happen again”
compartment of investors’ memories.
On Black Monday, October 19, 1987, the
Dow Jones Industrial Average (DJIA) fell 22.6% in the greatest one-day loss ever recorded on Wall Street. Despite varying perceptions, there were
clear fundamental and technical warnings preceding the crash that were detected by a few investors. For the rest,
the market euphoria raging at