Reliving the Fear: What it Felt Like on Black Monday

October 16, 2023

On Thursday of this week is the anniversary of Black Monday.

22% was wiped off the Dow Jones Industrial Average in a single day.

Read that again. Not a year. Not a month. Not a week. 1 day.

Since that day, circuit breakers were introduced to alleviate that kind of precipitous decline, which halts trading for an allotted time period if the stock market panic plunges. The first one starts at 7% on the S&P 500.1

But what a day that was…

If your $500,000 was 100% in the DOW while you drank your morning coffee before using your Aqua Net hairspray to make yourself presentable for the day, it was less than $400,000 during the news with Dan Rather that night.

Imagine how that felt.

Robert Shiller can help. He wrote a paper a month later in November of 1987 derived from results of a survey that inquired how investors behaved during the crash.

The questionnaire asked about actual symptoms of anxiety experienced by respondents…:difficulty concentrating, sweaty palms, tightness in chest, irritability, or rapid pulse. Fully 20.3% of the individual investors in INDIV and 43.1% of institutional investors answered yes for the date Monday, October 19; substantial percentages answered yes for adjacent days. It is remarkable that such a proportion of the general population reported such specific symptoms of real anxiety at one time.

Moreover, 23.0% of the individual investors and 40.2% of the institutional investors reported experiencing a contagion of fear from other investors. Among individual investors who sold on October 19, 53.9% reported experiencing contagion of fear.2 

Contagion of fear. Irritability—ha!, ya think?

What may be more of a shock is that, though many experienced anxiety and fear, few acted on it. Shiller explains,

The survey revealed a remarkable amount of concern and involvement in the stock market among individual and institutional investors, while very few individual investors and only a moderate number of institutional investors actually changed their holdings on October 19.3   

Since statistics aren’t people, let’s zoom in a bit more on one individual. Here is how a chief financial economist described that day:

It felt like an earthquake. You can't believe it's happening. You just want it to stop. It felt very surreal and very unsettling emotionally. It did seem that for a time the world was ending. And the bad feeling wouldn't go away for days.

It made you question things outside of Wall Street, as well as questioning all you had learned about financial markets. After losing 20% of your money, your savings, it made you question your day-to-day life. What you were doing. How your career was going. How your family was. Everything seemed to be out of whack.4  

It wasn’t just about the stock market anymore. He questioned everything.

The effects of a crash like that can last awhile too.

The Washington Post in 1989, less than two years after that momentous day, gives the perspective of one broker and the impact he sees on his clients:

But at the retail level, the overall condition is still fairly grim, according to Michael Roberts, a broker at Purdential-Bache in Bethesda. Roberts often talks to clients about the value of including equities in their portfolio. “People accept the idea intellectually,” he said, “but viscerally they are very, very scared.” 5  

Intellectual acceptance, and visceral fear.

I see this as an advisor. It’s one thing to show a person’s risk profile and how this that or the other thing might cause their portfolio to drop 20%, it’s another thing altogether for them to actually experience it. They can shrug their shoulders when it’s a piece of paper, yet likely will respond differently when it’s happening in real time with their money.

The question is, what will you do the next time there is a stock market crash? How will you respond to the fear and anxiety that shoots through your nervous system and intrusive thoughts about loss of money, concern about your future wealth, and feeling of certainty that it will only get worse?

Will you change your holdings?

Why not take the time now to write down what you will do, and then bookmark this page and come back to it when it happens.

Better yet: when was the last time you, your family members, and your friends revisited investment portfolio risk?

And remember risk cuts both ways: the risk of having too much of something and the risk of not having enough.



  1. Stock Market Circuit Breakers
  2. “Investor Behavior in The October 1987 Stock Market Crash: Survey Evidence”, Working Paper No. 2446. National Bureau of Economic Research. November 1987, p. 11-12. Accessed online: w2446
  3. Ibid., p. 10.
  4. Quoted by Adam Shell, “Black Monday 1987: Memories of the stock market's worst day”, USA Today (October 19, 2017). Accessed online:
  5. Stan Hinden, “A More Sober Dow Nears Its Peak”, Washington Post (July 23, 1989). Accessed online: A MORE SOBER DOW NEARS ITS PEAK