by Pam Martens, Wall Street on Parade:
If you happened to be sitting behind a Wall Street trading terminal on Tuesday, October 20, 1987, you are likely having heart palpitations reading about what’s currently happening in the Chinese stock market. Tuesday, October 20, 1987 was the day after Black Monday, the infamous U.S. stock market crash that shaved 22 percent off the Dow Jones Industrial Average in a single day.
Only those working behind a trading terminal the day after the crash can truly appreciate the horror of having customer orders to sell their stock and having no idea as to the price at which the stock was trading despite the market being technically open for trading. On Tuesday, October 20, 1987, the U.S. stock market was less of a market and more of a crapshoot. So many stocks had been halted for trading that futures markets in Chicago had to stop trading since so many of the component stocks in the futures indexes were simply not trading in New York, thus their actual prices were unknown.
The official report on that episode, known as the Report of the Presidential Task Force on Market Mechanisms (or Brady Commission Report), referred to that Tuesday market as “dysfunctional,” writing:
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