Originally posted by Badgered1
The index was down, but it was a knee-jerk panic reaction that caused the fall. I'm not sure that you can really line up all the factors and expect
patterns to foretell future crashes. It was just a very weird occurrence.
THe worst crash in 1987 was in Hong Kong? WHy? Because they closed th markets to stop the crash and that simply amplified things. Brown can tend to
panic and do club-fisted things as a bullyboy. As a result, there is a risk he could just try to shut the markets in the event of a developing
Sequence of events in 1987.
- Chemical Bank raised their interest rates slightly on inflation worries.
- A sequence of small slides set in in USA
THURSDAY 15th OCTOBER 1987
- Storm hits on Thursday night in UK.
FRIDAY 16th OCTOBER 1987
- Friday, adaptive expectations kick in and Dow drops worst in years as UK can only a sit on sidelines.
SUNDAY 18th OCTOBER 1987
- Report in Sunday Times showing directors selling stock at 9 to 1 ratio, just like now as rats leave the sinking ship.
MONDAY 19th OCTOBER 1987 EARLY MORNING
- Desperate to sell, selling by British to "beat the opening" sneaks onto AUstralian market. Triggers selling and Australian market falls 4%.
MONDAY 19th OCTOBER 1987 9AM GMT OR SO
- London opens. A deluge of sell orders has now piled up at brokerage houses. A groups of major brokerages decide to try to use the event to put the
squeeze on small ones and agree to reduce harshly the opening prices by a percent or two. Deluge does not stop and the original plat to raise prices
after ten minutes becomes impossible. After a stall in prices falling after that ten minutes, the brokerage houses break rank and work on the basis
of "whoever panics first is saved". By noon, the selling slows up and prices begin to slow up, and brokerages begin to tel customers that the worst
is over and to consider buying again. My own sell orders are ignored!
MONDAY 19th OCTOBER 1987 - NOON GMT
- Steady flow of sell orders pours in from institutions concerned about fall, stunts any recovery and market retreats back to 6% fall.
MONDAY 19th OCTOBER 1987 - 1pm GMT
- Hushed silence begins to grow at concern over US reaction to UK fall - Trades slow up as everyone watches to see what New York will do on
MONDAY 19th OCTOBER 1987 - 2pm GMT
- Dow Jones opens sharply lower. Massive wave of selling begins.
MONDAY 19th OCTOBER 1987 - MID- AFTERNOON GMT
- Reuters reports that US warplanes have exchanged fire with Iranian vessels and bombed an "oil rig" Every traders reaction is the same..."OK,
that's it, they've started shooting". Institutions now mindlessly chuck vast blocks of shares at the markets. By now losses are so great, that
not only have almost all stock option dealers stopped answering their calls, but almost all brokerage houses have too.
MONDAY 19th OCTOBER 1987 - 4PM GMT
- Deep concern about being caught out with shares on their hands overnight as Dow Jones dives and is projected to tank whilst London is closed sets in
motion a skyrocketing of sales and institutions frantically attempt to dump their entire share portfolio.
MONDAY 19th OCTOBER 1987 - CLOSE GMT
- London closes some 12.7% down.
- Dow jones absolutely tanks as concern spreads about Tokyo's opening.
TUESDAY 20th OCTOBER 1987 - Early morning
- All eastern markets tank
TUESDAY 20th OCTOBER 1987 - OPENING
- As the man on the Clapham Omnibus realises that the stock market has crashed, he too frantically tries to sell. Almost all option trading has
seized up and most brokerages have stopped answering their phones.
- Opening is clogged with small sell order on London. London dives.
TUESDAY 20th OCTOBER 1987 - NOON GMT
- Most New York brokerage houses have taken all night to resolve the astronomic volume. At Spear, Kellogg, Leeds, the last trade is matched up less
than 30 minutes before the start of trading. Addition finds that Spear, Leeds, Kellogg is still technically solvent and can still trade. Chief
dealer decides that they company is wrecked anyhow so decides to continue to trade.
TUESDAY 20th OCTOBER 1987 - NOON GMT
- Dow Jones dives for a second day.
- The computers recording the Dow Jones are now running 92 minutes behind time due to the market volume compared with the ticker-tape at the same
point in the 1929 crash which was running 89 minutes behind.
- Most indexes now have to be suspended as all brokerage houses dealing in certain stocks have now suspended trading by leaving the phone off the
hook. Without trade in the component stocks, the indexes can't be quoted.
- Through a quirk of the regulations, Spear, Leeds, Kellogg find themselves still able to trade despite being technically cataclismically bankrupt.
According to the New York stock exchange, an options trader cannot trade if he is illiquid, but according to the American Exchange, just around the
corner, a trader cannot trade if he is illiquid AT THE END OF THE DAY'S TRADING. Chief trader at Spear, Leeds, Kelloggs concludes they are already
bankrupt, owing several billion dollars in debts, so she had nothing to lose, so she hangs up the phone on her company's head office and continues to
trade. As a result, Spear, Leeds, Kellogg, without realising it, is now the only specialist stock options house left in the western world still
trading, and now having to do doing so with individual traders. The whole of America's holdings in stock and shres are now piling up on their books.
Two things result, firstly, their losses are racking intot the hundreds of billions and secondly, their continuing to trade means that all component
stocks of the American Main Market INdex are still quotable as her team continues to set prices meticulously based on supply and demand as she is
contracted to do so.
TUESDAY 20th OCTOBER 1987 - 1pm
- Dow has now fallen 666.67 points.
- With everyone concluding that stocks are unsaleable, sell orders fall and a bunch of speculators brave the market, enough to bid up a couple of the
stock at the Spear, Leeds, Kelloggs pitch. As a result, the American Exchange Main Market Index turns from red to blue on all the brokerage houses
across the world. In seconds, Spear, Leeds, Kellogg are inundated with buy orders that sends the Amex Main Market Index hurtling upwards and all the
associated stocks and clearing the SLK debts in minutes.
TUESDAY 20th OCTOBER 1987 - MID AFTERNOON
- With the turning of the Amex MMI, traders conclude that the low has passed and begin buying on all the indexes as option and stock traders race back
tot heir desk. All the indexes rise and follow a 50% retracement..