Interesting post Cheese. Strange that no one has commented on it. What is that methodology that you mentioned?
I started trading in 1986. So I was very green when the 1987 crash happened. My whole trading capital then was invested in call spreads on various stocks I remember. And of course I lost it all.
Yeah I was there. Brokers did not answer their phones. Nobody seemed to care about the quality of companies, they just wanted to sell. My account equity was greatly reduced during the crash but I bought stocks as a contrary trade. Everybody at work laughed at me and it was very embarrassing. I made a little money when prices recovered. I could have traded better. If I could do it again I would follow trends, sell stocks as prices began to decrease long before the crash, buy leading stocks during the recovery, trade long term. There was big money to be made but not by following the crowd. I remember interest rates rising for about 6 months before the crash and the NYSE advance decline line did not confirm the Dow Jones Industrial Index graph at the top. I recall breadth was very narrow for a few days right at the top.
I remember the fear and panic. I've never been so scared. My friends were laughing at me. It was the only day of my life I bought a lottery ticket. Most of my money was in a mutual fund, and I recall coming to the realization that *IF* I could get through to sell, it would be at the NEXT day's closing price, which might be another 20% lower. My diversified portfolio lost 36% in the space of 3 or 4 days. PS: the VIX got to almost 175. The current 36 or 40 highs are nothing by comparison
I watched it all go down on a 15" green mono chrome monitor (state of the art in those days) There are no similarities whatsoever. The 1987 crash was a surprise, today's markets conditions are too well known.
Cheese, your post below is strangely Jack-like, But it fails to capture the essence of Jack in one respect, viz,. it is not entirely nonsensical.
If you want to get a very accurate and in depth account of what caused the '87 crash and how it played out, read Richard Bookstaber's book "A Demon of our own Design." One of the best books ever written on markets, market makers, hedge funds and trading.