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1 Introduction 11 Black Monday The 1987 stock market crash stands out as one of the most remarkable financial events of the 20th century perhaps since the emergence of our capitalist system several centuries ago What makes it remarkable is 1 The historic extent to which markets fell an unprecedented 23 and that they did so all over the world 2 Its suddenness how it appeared out of nowhere and only took one day to play itself out 3 Its complete lack of explanation To this day no definite reason for the decline has been isolated Basic concepts such as cause and effect predictability and human rationality melt before the evidence of the record breaking decline 12 2001-2002 decline This downturn can be viewed as part of a larger bear market or correction after a decade-long bull market had led to unusually high stock valuations The NASDAQ was trading at 423433 on September 1 2000 From September of 2000 the NASDAQ dropped 459 to 229186 by Jan 02 2001 In Oct of 2002 the NASDAQ dropped as low as 110849 which is 784 drop from its all-time high of 513252 in Mar of 2000 A total of 8 trillion dollars of wealth was lost in the market decline 2 Causes of the Crash in 1987 So what were the causes of the stock market crash of 1987 Many stock market analysts believe that the crash was set off by a number of events Here I am providing five reasons that could be factors for the crash in 1987 including psychological cause the poor choices of portfolio insurance professionals program trading derivative securities and trade and budget deficits 21 Psychological cause 1 Why the 1987 crash occurred on Monday October 19 In the historical model investors had adopted the crash had occurred on a Monday in October 1929 The overlap in Mondays resulted in
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