NEW YORK — Ted Weisberg remembers the 1987 stock- market crash like it was yesterday.
He had been a floor broker at the New York Stock Exchange for 18 years but had never seen the panic or billions of dollars in losses that occurred Oct. 19, 1987, 20 years ago today, as the Dow Jones industrial average tumbled 508 points, or 22.6 percent.
“You could feel, taste and touch the emotion,” Weisberg said of what soon became known as Black Monday.
The decline remains the biggest one-day percentage drop in the Dow’s 111-year history.
Could it happen again? Some experts see similarities between conditions then and now. As in 1987, the dollar is weak, oil and commodity prices are rising, volatility is surging, and stocks are in the fifth year of a bull market.
Many analysts say another one-day plunge is unlikely. Liz Ann Sonders, a strategist at Charles Schwab Corp., calls the chances “infinitesimal.”
“There are a lot of similarities” between ’87 and ’07, she said. But “there are important differences too.”
Indeed, the financial markets have undergone a tremendous transformation in the past two decades, growing enormously and becoming globalized. And thanks to technology, the volume and speed of trading have soared.
It is the reliance on technology that bothers experts who see parallels between a computer-aided trading strategy used in 1987 and the computer-driven trading of today’s “quantitative” hedge funds.
Two things that haven’t changed are the key financial emotions: greed and fear. Investors who piled on debt to boost their already healthy returns suffered heavy losses in 1987, which were made worse when they panicked, traders said.
