The Crash of '87
By Eric and David
What Happened?
In the first half of 1987 stock prices had risen dramatically. Prices fluttered up and down the following weeks. On October 19 stock prices fell more than any other single day in the 20th century. Over 604 million shares were traded on the New York Stock Exchange alone. Some of the selling was done by computers, which were programmed to sell stocks if prices fell below certain level.Phones and networks were jammed due to the high volume of trades. Investors lost about $500 billion.
What Caused It?
Fears of inflation of the 1970s and 1980s returning caused interest rates to rise.
What Caused It?
Investors trying to get rich quickly caused stocks to become overvalued. Stock prices were too high compared to their dividends and earnings.
What Caused It?
Investors saw stock prices falling causing them to cash-out and sell their stocks as fast as possible to avoid major loss.