A Stock Market Panic Like 1987 Could Happen Again
- 7 years ago
A Stock Market Panic Like 1987 Could Happen Again
On Oct. 12, for instance, The Wall Street Journal said portfolio insurance could start a “huge slide in stock prices
that feeds on itself” and could “put the market into a tailspin.” And on Saturday, Oct. 17, two days before the crash, said portfolio insurance could push “slides into scary falls.” Such stories may have inclined many investors to think that other investors would sell if the market started to head down, encouraging a cascade.
The Brady Commission found that portfolio insurance accounted for substantial selling on Oct. 19,
but the commission could not know how much of this selling would have happened in a different form if portfolio insurance had never been invented.
On Oct. 12, for instance, The Wall Street Journal said portfolio insurance could start a “huge slide in stock prices
that feeds on itself” and could “put the market into a tailspin.” And on Saturday, Oct. 17, two days before the crash, said portfolio insurance could push “slides into scary falls.” Such stories may have inclined many investors to think that other investors would sell if the market started to head down, encouraging a cascade.
The Brady Commission found that portfolio insurance accounted for substantial selling on Oct. 19,
but the commission could not know how much of this selling would have happened in a different form if portfolio insurance had never been invented.