what was black monday 
black monday occurred on oct 19 1987 when the dow jones industrial average djia lost almost 22 in a single day the event marked the beginning of a global stock market decline and black monday became one of the most notorious days in financial history by the end of the month most of the major exchanges had dropped more than 20 1economists have attributed the crash to a combination of geopolitical events and the advent of computerized program trading that accelerated the selloff causes of black mondaythe cause of the massive stock market drop cannot be attributed to any single news event since no major news event was released the weekend preceding the crash however several events coalesced to create an atmosphere of panic among investors aftermath of black mondayfollowing the crash the federal reserve slashed interest rates by half a percentage point hoping to free up capital and encourage more lending it also injected billions of dollars into the economy through quantitative easing regulators introduced new protective mechanisms to prevent flash crashes due to program trading circuit breakers were introduced to leading stock markets to automatically shut down trading in the event of unusual price movements circuit breakers can halt all trading on an exchange if a certain index in the u s the s p 500 experiences an unusual drop there are also circuit breakers for individual stocks halting trading in that security only this is intended to prevent traders from panic selling during momentary drops as of 2022 the circuit breakers are set at the levels of 7 13 and 20 a 7 drop from the close of the previous trading day is considered a level 1 decline resulting in a 15 minute trading halt a 13 decline is level 2 and also results in a 15 minute halt a 20 drop ends trading for that day can it happen again since black monday a number of protective mechanisms have been built into the market to prevent panic selling such as trading curbs and circuit breakers however high frequency trading hft algorithms driven by supercomputers move massive volumes in just milliseconds which increases volatility the 2010 flash crash was the result of hft gone awry sending the stock market down 10 in a matter of minutes 2 this led to the installation of tighter price bands but the stock market has experienced several volatile moments since 2010 amid the 2020 global crisis markets lost similar amounts in the month of march as jobless rates reached their highest levels since the great depression before recovering over the summer of that year lessons from black monday and other market crashesa market crash of any duration is temporary many of the steepest market rallies have occurred immediately following a sudden crash the steep market declines in august 2015 and january 2016 were both roughly 10 drops but the market fully recovered and rallied to new or near new highs in the following months a well conceived long term investment strategy based on personal investment objectives should provide the confidence for investors to remain steadfast while everyone else is panicking investors who lack a strategy tend to let their emotions guide their decision making knowing that market crashes are only temporary these times should be considered an opportunity to buy stocks or funds market crashes are inevitable savvy investors have a shopping list prepared for stocks or funds that would be more attractive at lower prices and buy while others are selling over the long term market crashes such as black monday are a small blip in the performance of a well structured portfolio short term market events are impossible to predict and they are soon forgotten long term investors are better served by tuning out the noise of the media and the herd and focusing on their long term objectives other black mondayswhile the term black monday is most commonly applied to the stock market crash of 1987 it can also be applied to any other sudden one day drop in prices on the first day of the week the first black monday was on oct 28 1929 just after the beginning of the crash that ultimately resulted in the great depression on that day stocks fell by 12 8 the crash was attributed to low wages increasing debt and an excess of large bank loans that could not be liquidated the term can also describe the flash crash on august 24 2015 when the djia fell by 1 089 points just after the market opened the drop which followed another sharp decline the previous friday was attributed to economic worries about china the market partially rebounded and closed 533 points below the open the term is less commonly applied to the crash of march 9 2020 when the djia fell nearly 8 due to the uncertainty surrounding the covid 19 pandemic the following thursday the market crashed again by 10 