What is Black Monday?

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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%.Economists have attributed the crash to a combination of geopolitical events and the advent of computerized program trading that accelerated the selloff.

Definition

Black Monday refers to the stock market crash that occurred on October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell by nearly 22% in a single day. This event marked a sharp decline in global stock markets and became one of the most infamous days in financial history.

Origin

The origin of Black Monday dates back to October 19, 1987, when global stock markets experienced a significant downturn. Economists believe that the crash was the result of a combination of geopolitical events and computerized program trading that accelerated the sell-off. By the end of October, most major exchanges had fallen by more than 20%.

Categories and Features

Black Monday is a type of stock market crash characterized by a rapid and significant drop in stock prices over a short period. Such events are typically triggered by a combination of factors, including market overheating, investor panic, and intensified technical trading. A notable feature of Black Monday was the significant role played by computerized program trading, which accelerated the market sell-off.

Case Studies

During Black Monday, many companies saw their stock prices plummet. For instance, IBM's stock price dropped by over 30% on that day, severely impacting investor confidence. Additionally, McDonald's stock also fell sharply on the same day, reflecting market concerns about future economic growth. These cases illustrate how market sentiment can dramatically affect company valuations in a short time.

Common Issues

Investors often panic and make irrational investment decisions during market crashes like Black Monday. A common issue is overreacting, leading to selling assets at market lows. To avoid this, investors should remain calm and focus on long-term investment goals rather than short-term market fluctuations.

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