Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit

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On October 19, 1987, a date that would later become known as Black Monday, the Dow Jones

industrial average fell 508 points or 22.6%.

This was the largest one-day decline that Wall Street had ever seen.

That one-day price drop was about the same in percentage terms as the two-day drop that

occurred in October 1929 on back-to-back days.

There were fears in the wake of the crash that it would lead to another Great Depression,

but in fact not even a recession occurred.

The unemployment rate was 6% at the time of the crash,

and it continued declining after the crash reaching 5.2% by the time the stock market had fully recovered in 1989.

No one-day drop had ever come close to the magnitude of the 1987 crash in the 100 years before the event, nor has there been a drop that severe since.

The crash marked the end of a five-year bull market that had seen the Dow rise from

776 in August 1982 to a high of 2,722 in August 1987.

The day after the crash, many investors feared that the market would topple again like

it had in 1929.

However, the market rallied immediately after the crash, posting a record one-day gain

of over 100 points the next day.

A record that was quickly broken on Thursday the 22nd,

when the Dow rose 186.64 points.

All in all, it took just under two years for the Dow to recover completely.

In today's video, we'll look at the events leading up to the crash, the best explanations

...