A crazy week followed by a panic free-fall on what ended up being called Black Monday, October 19, 1987. I was on the institutional equities trading and sales floor at Morgan Stanley’s then headquarters in the Exxon building on 6th Avenue and scary is an understatement. Dumbfounded with dropped jaws we watched what we thought was the end of it all. It may have been, but for the clear Federal Reserve coordinated market interventions of the major Wall Street investment banks purchasing the key “bell-cows” of the Dow and S&P the following day, which bid up prior closed stocks aggressively from their pre-opening lows. I will always remember seeing the then chairman of the firm, Dick Fisher and other executive partners standing next to the market making prop-traders desk as they bid up the designated stocks for our firm, as other majors did the same for their assigned names. The bars were filled with sorrow and booze on Monday and relief and booze on Tuesday, either day was a good one for the barkeeps.
Marty Zweig nailed it as did a young friend on the derivatives desk at Morgan who loaded up on the most leveraged futures and option short plays he could finance the Friday prior. What is coming at us, when it truly hits will make the crash of 87 look like child’s play and even being short, when counterparties default, may not be the panacea to wealth creation and preservation it was for some in that less convoluted, less globalized world.