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Revisiting the October 1987 Crash

Barrie A. Wigmore
Financial Analysts Journal
Vol. 54, No. 1 (Jan. - Feb., 1998), pp. 36-48
Published by: CFA Institute
Stable URL: http://www.jstor.org/stable/4480051
Page Count: 13
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Revisiting the October 1987 Crash
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Abstract

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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