Today marks the 30th anniversary of the 1987 Black Monday Crash, an event that had a major impact on investor psychology for a generation and beyond. While it would be completely irrational, given human nature, one would think that the 22% decline in the DJIA on 10/19/87 would cause investors to become a little more risk averse at this time of year. The increase in articles about the “Crash of ’87” every October has to make some investors uneasy.
Interestingly enough, looking at the historical performance of the DJIA on October 19th shows an interesting trend. In the years from 1900 through 1986, the DJIA averaged a one-day decline of 0.30% (median: -0.14%) on 10/19 with positive returns just 43% of the time. In the 30 years since the crash, however, the DJIA has averaged a gain of 0.19% (median: 0.44%) with positive returns two-thirds of the time. So much for the scars of 1987.