Remembering Black Monday

On Oct. 19, 1987, the Dow fell 22.6% in a single day - a terrifying collapse that resonates anew in today's shaky market. We asked ten veterans of the crash to share their memories of what it was like and the lessons they learned.

Elaine Garzarelli
Elaine Garzarelli
President of Garzarelli Capital; in 1987 an analyst at Shearson Lehman
It was a happy day for me, because at the time I was running a mutual fund with about $500 million, and the fund's net asset value was up 50 cents that day, while most other funds were down.

My indicators had suggested that the stock market was 35% overvalued, so about a week before I had sold half the stocks in the portfolio and then put in options, so I was well hedged for the crash. As a result, I was given credit for predicting it. It was a happy day in that sense. But in another sense it was a sad day because so many people lost money. I was heartbroken to see how many clients were upset.

That morning I didn't go to the office because I had a meeting at 10:30 and I was preparing at home. I was watching everything on TV, and I started to get heart palpitations. And I thought, "What is going on here? I'm hedged, my fund's going to be up today - what am I so nervous about?"

I called my cousin, a nurse, who lives two apartments away, and she said, "I think you're having a heart attack." And I said, "What? I'm in my early 30s!" So she called an ambulance. Which I thought was ridiculous. They came and said my heart was perfect; it was anxiety. I was upset about my clients' calling and everyone getting so nervous. Some were in tears. But then I was happy when my fund's results came out. That night I went to a Japanese restaurant and celebrated.

I felt awkward because I got so much attention. A few weeks after that I made a negative comment, and the market dropped 120 points that day. The Wall Street Journal wrote that I had moved the stock market, and I was very uncomfortable. My career was going very nicely until then, and it was too much attention. It was a lot of pressure. But the crash didn't shape the way I look at the market at all. It gave me even more confidence that the indicators are very good - that I should stick to them no matter what.

John Phelan

Elaine Garzarelli

Michael Steinhardt

Bill Rudin

Jim Cramer

Fred Joseph

Muriel Siebert

Ted Weisberg

Robert Hormats

Nicholas Brady
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