There are those handful of days that you will never forget in your career. For me those days are: 9/11; The UAL Mini-crash; the Russian Coup; the Flash Crash; and, of course Black Monday October 19,1987. Except for me, it was Tuesday October 20, 1987.
At the time I was still for the most part cutting my teeth on Wall Street, having joined Morgan Stanly (MS) about three years prior to that day. However, in February 1987, MS asked me to be part of the team to ramp up operations in Tokyo, Japan after MS was one of the first non-Japanese firms to gain admittance to the Tokyo Stock Exchange. It was the experience of a lifetime and an opportunity which helped to propel my career.
I was in the elevator heading up to the Equity Trading Floor at the company’s Ote Center offices in Otemachi, Tokyo the morning of October 20, 1987 when some investment bankers were talking about the market being off 500 points. I thought to myself, no big deal as the Nikkei 225 stood at nearly 26,000. I knew the global markets were jittery the week before but a move of less than 2% while not great was also not earth shattering either.
Then I got to the trading floor and chaos was ensuing. As it turned out, it was the Dow Jones Industrials (INDU) that fell 508 points, nearly 23% the day before. Needless to say; it was a long day.
It was also a good day to put cash to work.
The 1987 Stock Market Crash was the worst one day decline since the 1929 Stock Market Crash. However, in 1987 there was no resultant systemic banking failure or depression. The 1987 Crash was attributed to the use of modern computerized program trading and the nascent derivatives markets.
The 1987 Crash also marked the first time that newly appointed Federal Reserve Chairman Alan Greenspan was put to the test. His reaction was to flood the monetary system with liquidity which led to the term “Greenspan Put.”
No doubt that you will hear all day today how a repeat of the1987 Crash is imminent. We heard the same thing on the 10th, 20th and 25th anniversaries. Ignore all those fear mongers.
Market conditions (including valuations) are different now than they were thirty years ago. Global economies are far more synchronized than thirty years ago. The Soviet Union was still in existence then. Technology is different than it was thirty years ago. Our everyday lives are different than they were thirty years ago. Did you have the internet or smartphones back then?
So, just sop up the nostalgia of the anniversary of Black Monday but continue to focus on today’s market opportunities.
Domo Arigato Gozaimasu
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DIA, DDM & UDOW — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– Read Scott’s intra-day thoughts and comments on Scutify for which he is a co-founder of its parent company Wall Street All-Stars, LLC
– You can email Scott at email@example.com
© 2017 LakeView Asset Management, LLC. All rights reserved.