What caused the '87 Crash?

Discussion in 'Trading' started by Bullz n Bearz, Aug 3, 2007.

  1. Anyone know? It couldn't be because price was too overvalued..
  2. Excessive use of "portfolio insurance".
  3. j1900q


    Dollar falling and market ignored higher rates for too long.
    trade well
  4. The same thing that caused the current decline...
    me shorting. :)
  5. It was because I my broker talked me out of buying those OEX puts on the previous Friday. He told me the markets had already fallen enough (something like 10% that week) and were poised to go up.
  6. and the answer is THE FEDERAL RESERVE.

    they have lowerd rates to the point of making the dollar worthless.

    it allowed all this pulling equity out of everyones' homes and put everyone in huge debt. AMERICANS will be homeless and broke very soon its scary
  7. bullshit...

    I lived thru the 87 crash and it was a singular idea that portfolio insurance could be had by shorting the SP 500 against any position of like value....and finally the Fed told Goldman and Morgan to lay off and let the indexes level off .....

    there were no bids in the pits and the Feds. stepped in and told the houses to knock off the joke.....
  8. Throw in my .02 but I thought the tipping point was some guy from the fed (John?) over the weekend told the Germans we wouldn't support the dollar. Bad timing (weekend) for the news.
  9. I recollect it was Jim Baker.

    But the setup happened long before that: rates had been rising since Spring but had been ignored and the market was in a bit of a bubble. (A few people including Paul Tudor Jones had modeled a comparison of the movement leading up to the '87 crash to the price movement in '28-'29.) Throw in portfolio insurance also, which lent an air of invincibility to the market, and which failed miserably as liquidity dried up.
  10. May be the people thinking on fed on tuesday provide us a pause on the selling until then to fall huge then on some disapointing fed failing to "save" a crappy market.

    it looks like 1390-1410 is on the way
    #10     Aug 5, 2007