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Bridge over ocean
1 January 1998 Financial Analysts Journal Volume 54, Issue 1

Revisiting the October 1987 Crash

  1. Barrie A. Wigmore

The crash of 1987 reflected panic selling by the retail public, foreigners, and institutions in response to overvaluation, an effort by the U.S. Congress to restrict merger activity, rising interest rates, and international policy squabbles. Portfolio insurance overwhelmed the specialists, who were unable to handle the large index trades in the Designated Order Turnaround system. The credit crisis on the second day reflected justifiable worries about brokers' credit. With valuation and other indicators back to the record levels of 1987, could the U.S. market suffer a repeat of October 1987?

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