Monday marks the 28th anniversary of Black Monday.
Aka the day when the Dow plunged a whopping 508 points, or 22.6%.
It also happened to be the day that now-chief strategist at Gluskin Sheff David Rosenberg began his career as an economist. (As if Mondays or first days couldn’t get any worse.)
Rosenberg writes in a note to clients that, on that fateful Monday, he joined the Bank of Nova Scotia as an economist, leaving behind his “cushy,” post-university three-year stint at Canada Mortgage and Housing Corporation.
“As I wandered through the trading floor — the first time I had ever seen a trading floor — I am sure I would have grabbed a return bus ticket back to my cushy civil service job in the nation’s capital had it been offered,” he recalls.
However, in the midst of all that frenzy, Rosenberg remembers following around two economists, then-chief economist Bill Mackness and then-assistant chief economist Warren Jestin, who remained “cool cucumbers” throughout the ordeal.
“Amid the pandemonium, they kept their heads as many others lost theirs, and showed chart after chart to support their view that we had a liquidity event on our hands, not a fundamental event, and that within weeks the dust would settle into a great buying opportunity,” writes Rosenberg.
“And they say economists can’t call the markets.”
Rosenberg isn’t the only Wall Street legend who had quite the memorable October 19. In his latest note, veteran trader Art Cashin, shared what he remembered about the mood on the Flood as Black Monday went from bad to worse.
Notably, given that the markets have been battered by capricious swings in recent months, analysts and investors alike would be wise to internalize the lesson of the two “cool cucumbers” described by Rosenberg.
After all, US economic growth was ultimately resilient, and gross domestic product never went negative following Black Monday in 1987. And there’s no point in panicking prematurely every time there are market moves.