Black Monday: What Happened, Why It Mattered, and What We Can Learn

On October 19, 1987, something happened that shocked the world.

The stock market crashed — hard.

The Dow Jones Industrial Average fell 508 points in one single day.

That was 22.6% of its total value, gone — just like that.

This day became known as Black Monday — the biggest one-day crash in stock market history.

What Caused It?

A few major things:

 1. Computer Trading:

Back then, people had started using computer programs to automatically sell stocks when prices began to drop.

It was called program trading.

But when the market started dipping, those computers went into a selling frenzy — causing more drops, which caused more selling. It became a snowball effect.

 2. Rising Debt and High Interest Rates:

At the time, the United States had a lot of debt, and interest rates were getting higher.

This made investors nervous about the economy.

 3. Fear and Panic:

When people saw the market dropping, many panicked.

They started selling out of fear, which only made things worse.

It’s like when you see one person running for the exit… suddenly everyone runs.

What Happened After?

The Federal Reserve stepped in and made sure there was enough money flowing in the economy to calm things down.

They also introduced circuit breakers — rules that would pause trading if things got out of control, to stop mass panic from happening again.

What Warren Buffett Said About It

Warren Buffett, one of the greatest investors of all time, had an interesting way of explaining moments like this.

He once said:

“A horse that can count to ten is a remarkable horse—not a remarkable mathematician.”

What did he mean?

Just because something looks amazing, doesn’t mean it actually is.

If a horse can count to ten, that’s incredible… for a horse.

But if you compare it to a mathematician, it’s not impressive.

He was saying we need to look at the real value of things — not just the hype.

A big jump in the market doesn’t always mean something is truly valuable.

And a crash doesn’t mean everything is worthless.

You have to dig deeper and understand what you’re investing in.

What About Today?

Right now, the market is shifting again.

 • New technology is changing how businesses work.

 • Countries around the world are arguing over trade and money.

 • Interest rates are moving up and down, making people nervous.

But Warren Buffett’s advice still holds true:

 • Stay calm when others panic.

 • Understand what you invest in.

 • Look for real value, not just excitement.

I’m diving deep into these lessons and more in my upcoming book, launching later this year.

We’re talking about learning from history, building wisely, and staying strong no matter what the market does.

Let’s Talk:

 • Have you ever seen people panic when things get tough?

 • What do you do to stay calm and make good choices?

 • How do you tell if something is truly valuable?

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