{"id":27024,"date":"2017-10-19T11:54:52","date_gmt":"2017-10-19T16:54:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27024"},"modified":"2017-10-19T11:54:52","modified_gmt":"2017-10-19T16:54:52","slug":"a-stock-market-panic-like-1987-could-happen-again","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27024","title":{"rendered":"A Stock Market Panic Like\u00a01987 Could Happen Again"},"content":{"rendered":"
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Frenzied traders on the floor of the New York Stock Exchange on Oct. 19, 1987.<\/span> Credit<\/span>Jim Wilson\/The New York Times <\/span><\/figcaption><\/figure>\n
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A Stock Market Panic Like\u00a01987 Could Happen Again<\/a><\/h3>\n
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Oct. 19, 1987, was one of the worst days in stock market history. Thirty years later, it would be comforting to believe it couldn\u2019t happen again.<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/header>\n

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Yet that\u2019s true only in the narrowest sense: Regulatory and technological change has made an exact repeat of that terrible day impossible. We are still at risk, however, because fundamentally, that market crash was a mass stampede set off through viral contagion.<\/p>\n

That kind of panic can certainly happen again.<\/p>\n

I base this sobering conclusion on my own research<\/a>. (I won a Nobel Memorial Prize in Economic Sciences in 2013, partly for my work on the market impact of social psychology.) I sent out thousands of questionnaires to investors within four days of the 1987 crash, motivated by the belief that we will never understand such events unless we ask people for the reasons for their actions, and for the thoughts and emotions associated with them.<\/p>\n

From this perspective, I believe a rough analogy for that 1987 market collapse can be found in another event \u2014 the panic of Aug. 28, 2016, at Los Angeles International Airport<\/a>, when people believed erroneously that they were in grave danger. False reports of gunfire at the airport \u2014 in an era in which shootings in large crowds had already occurred \u2014 set some people running for the exits. Once the panic began, others ran, too.<\/p>\n

That is essentially what I found to have happened 30 years ago in the stock market. By late in the afternoon of Oct. 19, the momentous nature of that day was already clear: The stock market had fallen more than 20 percent. It was the biggest one-day drop, in percentage terms, in the annals of the modern American market.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Frenzied traders on the floor of the New York Stock Exchange on Oct. 19, 1987. CreditJim Wilson\/The New York Times A Stock Market Panic Like\u00a01987 Could Happen Again Oct. 19, 1987, was one of the worst days in stock market history. Thirty years later, it would be comforting to believe it couldn\u2019t happen again. Yet […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[13166,501,16593,1921,5821,2731],"class_list":["post-27024","post","type-post","status-publish","format-standard","hentry","category-economics","tag-13166","tag-market-crash","tag-market-panic","tag-new-york-times","tag-robert-shiller","tag-stock-market-crash"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27024"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27024\/revisions"}],"predecessor-version":[{"id":27025,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27024\/revisions\/27025"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}