Black Monday was 29 years ago on Wednesday.
When people refer to the events of that October day, they’re quick to cite the shocking 508-point plunge — or the fact that the three-digit number translated to a 22.6% drop.
But those numbers alone don’t quite convey the fear that investors and traders felt at the time.
In his latest note, veteran trader Art Cashin, the director of floor operations for UBS Financial Services at the New York Stock Exchange, shared what he remembered about the mood on the floor as Black Monday went from bad to worse.
He details the frenzy among traders and even recalls a broker soberly alluding to the mythical gladiator’s salute, immortalised by Roman historian Suetonius.
“At the time, I was running the floor for PaineWebber. Monday morning I got up well before dawn and saw that Hong Kong was down about 10% and other markets were looking equally weak before their openings. I headed for the NYSE to check on our systems and staffing. I reached out asking the team to get in early.
Once I had checked out the systems and verified staffing, I went with a partner up to the Luncheon Club for a quick coffee. With markets around the globe all down about 10%, I didn’t know if we’d get to a coffee — or anything else after we opened.
We sat about two tables away from a table where NYSE Chairman John Phelan sat with several directors and some staff. Every ten minutes or so, someone would rush up to Phelan and slip him a note or whisper in his ear. It was evident that things were deteriorating. As I headed for the floor, I went past Phelan’s table, put my right arm across my chest and said — ‘Nos Morituri Te Salutamus Esse’. It was the gladiator’s salute to the Emperor — ‘We, who are about to die, salute you’. Phelan nodded without a smile. […]
Shortly after the opening, as it became clear that this would be a very special and very dangerous day, several NYSE directors met in Chairman Phelan’s office. They checked around the street to gauge any new trends in the selling pressure. They were also on the phone with the White House via former Senator Howard Baker, who was White House Chief of Staff.
Meanwhile, back on the floor, the situation felt more unreal. Orders flowed in faster and faster and the tape ran later and later. (The tape was linear and the human eye can only recognise a certain number of symbols per second, 900 I think. To run faster than that would make the tape an unreadable blur. Traders can trade faster than the maximum reading speed — so the tape ran late.) One broker said it was like a bizarre dream sequence — nothing seemed real.”
“It was an incredible time and the financial system was within hours (and a few phone calls) of an absolute collapse,” he added. “It was a time I’ll never forget.”
Still, remarkably, the stock market didn’t die and gross-domestic-product growth never went negative that year.
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