To the strands of Phil Collins’ “Land of Confusion” the Chicago Board Options Exchange and Dow Jones Indexes this morning at the CBOE kicked off a panel examining the 1987 Stock Market crash as its 20th anniversary nears. The panel includes CBOE Chairman and CEO Bill Brodsky who was president of the Chicago Mercantile Exchange at the time; Blair Hull, chairman and CEO of Matlock Capital and a market maker on the CBOE at the time; Wayne Luthringshausen, chairman and CEO of the Options Clearing Corporation and Philip J. Roth from Miller Tabak.
Brodsky noted that there was quite a lot of market turmoil leading up to “Black Monday,” and as he went home the previous Friday, he was not looking forward to Monday. Brodsky compared it to a tornado, “ You knew it was coming, but didn’t know how bad it would be.”
Blair Hull noted that the episode should be referred to as black Tuesday because while the dramatic fall on Monday was bad, the uncertainty on Tuesday was worse. “Tuesday was when the panic set in,” Hull said, noting that their volatility measures were as much as 30 points off as they attempted to make markets.
Hull also gave credit to the Chicago Board of Trade because its Major Market Index (MMI) was the only stock index to remain open for trade that entire day.
Many analysts feel that equity markets are in a similar situation today so it will be interesting to hear what similarities the experts see. Stay tuned.
