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From October 14 to October 19th of 1987 the major parts of the market dropped around 30% or more. Today October 19th is referred to as Black Monday because the NYSE dropped 508 points, the largest one-day fall in history. On October 20th these parts gained back some of their loss. Many people tried to accuse different people and events for this crash, but no one can fully explain why it happened. ~Computer trading securities-many analysts say this is the cause. Computers in large investing companies were programmed to order large numbers of stocks when certain market trends prevailed. ~Illiquidity- trading mechanisms in the stock market were unable to deal with such a large flow of sell orders. ~Trade and Budget deficits-trade and budget debts during the third quarter of 1987 might have led investors into thinking that these debts would cause the crash. ~The Federal Reserve provided help to commercial banks by making a discount window available if they fell into heavy reserve needs. ~The stock price recovery was much shorter after this crash than after the crash of 1929. ~"Circuit Breakers"- The NYSE restricted some forms of program trading past certain volume levels to decrease the chances of another crash happening. ~Computer systems- the NYSE changed their computer systems to increase management effectiveness, accuracy, efficiency, and productivity.
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