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Happy Birthday, Black Monday!
Today marks the twentieth anniversary of Black Monday, the biggest one-day stock market plunge in history. On October 19, 1987, Bay Street was shocked to see all the key market indices plummet. The TSE 300 lost over 400 points as, in a frenzy of panicked selling, a record 77 million shares were desperately traded on the floor of the Toronto Stock Exchange. By day’s end, hundreds of millions of dollars evaporated from share values, including $37 billion in Toronto alone.
The market crash signaled the end of the indulgent 1980s high life, when having a stockbroker was a status symbol for the ambitious and upwardly mobile, and people borrowed to buy stock, then borrowed against their paper profits. Between 1982 and 1987, this speculative rush for stocks sent world markets streaking ever higher, far exceeding the underlying value of the companies’ assets. When the crash came, some of Canada’s wealthiest businessmen were the biggest losers: Edgar Bronfman of Seagram lost an estimated $126.3 million; Conrad Black of Hollinger lost $14.7 million; and Paul Reichmann of Olympia & York Developments lost an astonishing $843.6 million. Balanced portfolios and millions in net worth ensured many millionaire businessmen rode out the downturn with little impact on their lifestyle.
The hardest hit, instead, were young professionals—doctors, dentists, lawyers, and stockbrokers—who had played the market with borrowed money. Few had sympathy for those victimized by their own greed and short-sightedness. “The yuppies got licked,” one broker told the Star, taking delight in imagining someone trading in their BMW for a VW Rabbit. Another leading fund manager added, “Anybody who speculates with everything they’ve got on one pitch of the ball deserves to get buried.” Sadly, those who fell prey to “the overpowering lure of commission-hungry salesmen talking never-ending profits” also included retirees and others who could little afford the volatility of equities.
On the one-year anniversary, some traders displayed grim humour by sporting “I Survived the Crash” shirts, and a handful commemorated the occasion with special Black Monday Martinis (distinguished by its black olive) at Bay Street bars. Black Monday’s anniversary has not usually been seen as befitting fanfare among Bay Street traders who’d probably rather not relive its haunting memory or provide superstitious reasons to undermine investor confidence.
There are no plans for commemoration or special attention today by the Toronto Stock Exchange. So, to create your own occasion, pick up the just-released 20th Anniversary Edition of Wall Street and spend your night with Gordon Gekko, the ruthless but alluring villain, to relive the hubris that led to the Black Monday crash in the first place.
Photo by Flo’s Diner from the Torontoist Flickr Pool.