Is Black Monday coming on October 19? What is the possibility of a repeat of the stock market crash that occurred on the same day in 1987?
October 19, 2026, is a Monday. Both the date and the day of the week coincide with the day the largest stock market crash in history occurred in 1987. In addition to this coincidence, the recent volatility in the market has led to a noticeable increase in social media posts suggesting that “next Monday might be Black Monday.”
Looking at the situation leading up to the weekend, semiconductor and AI-related stocks have been sold off heavily worldwide, and it is reported that Nikkei 225 futures have fallen by around 1,000 yen. With the decline in US stocks, the rise in the fear index, and the combination of high oil prices and high interest rates, the market atmosphere is certainly tense. The addition of a historical date coincidence is likely why anxiety is spreading in a chain reaction.
In this article, we will review what happened in 1987, organize the similarities and differences with the current market, and then consider the “possibility of a crash of the same scale being repeated.” To state the conclusion first, it is considered extremely unlikely that a one-day crash of the same scale as 1987 will occur. However, we cannot rule out the possibility of a significant decline on Monday. Distinguishing between these two points is the starting point for staying calm.
What happened on October 19, 1987
An abnormal day with a decline of over 20 percent in one day
On October 19, 1987, the Dow Jones Industrial Average on the New York market fell 508 points from the previous weekend, closing at the 1,738 level. The decline rate was 22.6 percent, which remains the largest single-day percentage drop in history. Since the decline rate of “Black Thursday,” which triggered the Great Depression of 1929, was about 12.8 percent, this figure is nearly double that. The S&P 500 also fell by about 20 percent.
This turmoil spread to the world in an instant. On the Tokyo market the following day, the 20th, the Nikkei average fell by about 15 percent, or more than 3,800 yen, recording the largest drop in history at the time. Other major markets such as London and Hong Kong also plummeted across the board, resulting in a simultaneous global stock market crash.
Multiple factors behind the crash
The cause of the crash has not yet been narrowed down to one. However, it is generally viewed that multiple factors overlapped. First, stock prices had tripled during the bull market that had continued since around 1982, and a sense of overvaluation was strengthening. Next, the US was burdened with the “twin deficits” of a budget deficit and a trade deficit, and pressure for rising interest rates was intensifying due to concerns about a weak dollar and inflation. Furthermore, a few days before the crash, tensions over tankers in the Persian Gulf rose, and geopolitical anxieties were compounded by the US military carrying out retaliatory attacks.
And what is considered to have decisively accelerated the decline was the mechanism of automated trading by computers, which was beginning to spread at the time. In a method called portfolio insurance, when stock prices fall, futures are automatically sold to prevent losses. However, because many managers used the same mechanism to sell all at once, it fell into a vicious cycle where the decline invited further selling. The fact that sell orders flooded in, exceeding the processing capacity of the exchange and leading to a state where prices could not be formed normally, also amplified the panic.
Unexpected developments after the crash
This major crash did not lead to a serious crisis in the real economy. The Fed at the time showed a stance of promptly providing liquidity, and the market regained its composure within a few days. US stocks recovered to their pre-crash levels in about two years, and a recession was also avoided. The Japanese market also recovered relatively quickly after the sharp drop the next day.
This sequence of events contains an important lesson. Those who sold on the day of the crash did not receive the benefits of the subsequent recovery. The magnitude of a one-day decline and its subsequent long-term consequences do not necessarily match.
Current market environment: What is happening
The content of the volatile market
Let’s organize the situation reported as of the weekend. It is reported that over the past few business days, global semiconductor-related and AI-related stocks have plummeted, and the total market capitalization of major companies has decreased by more than 1 trillion dollars. Concerns about whether huge investments in AI will lead to profits seem to be inviting selling by investors. At the same time, rising oil prices and high interest rates are weighing on stocks.
Regarding Japanese stocks as well, the decline is occurring while the Nikkei average is in a historical high range of around 65,000 yen. In early September, there was also a scene where it fell significantly against the backdrop of high oil prices accompanying the tense situation in the Middle East and the strengthening of expectations for interest rate hikes in Japan, the US, and Europe. The composition of anxiety factors overlapping after rising to a high level certainly looks similar to just before 1987.
Similarities pointed out by experts
In fact, some market participants have pointed out similarities to 1987. For example, there is the point that the Fed Chair has recently changed, and their stance on inflation is being tested. In August 1987, the crash occurred two months after Mr. Greenspan took office as Chair. Other commonalities cited include tensions in the Middle East, the wavering of international cooperation systems, and a sense of overvaluation due to the rapid rise in stock prices.
On the other hand, just because there are similarities does not mean the outcome will be the same. There are many examples of similar situations that followed completely different paths. Rather than the number of similarities, it is more important whether the mechanisms that actually triggered the crash still exist in the same way today. We will examine this point next.
The decisive differences between 1987 and today
Safety devices called circuit breakers
The biggest difference is that mechanisms to mitigate sharp declines are built into the market. Taking the 1987 crash as a lesson, the United States introduced a circuit breaker system that temporarily halts trading across the entire market. Currently, trading is halted for 15 minutes each when the S&P 500 falls by 7 percent and 13 percent from the previous day’s closing price. If it falls by 20 percent, trading for the day is terminated.
In other words, a scenario like 1987, where a decline of over 20 percent continues in a single day, is quite unlikely under the current system. By stopping trading, investors gain time to judge the situation calmly, and the confusion caused by a flood of orders is mitigated. In fact, this mechanism was triggered multiple times during the sharp decline caused by the COVID-19 pandemic in March 2020. Although the Dow fell by about 13 percent in a single day during that period, trading continued without the market functions becoming paralyzed.
Individual stocks also have mechanisms to limit daily price fluctuations, and the Japanese futures market has systems in place to curb rapid volatility. While the detailed mechanisms differ by market, a current feature is that there are many buffers in place that did not exist back in 1987.
Different from the automated trading mechanisms of that time
Next, portfolio insurance, which was considered to have accelerated the crash, is hardly used in its original form today. However, modern markets are flooded with other forms of automated trading. These include high-frequency trading, mechanisms that trade mechanically in conjunction with indices, and operations that adjust leverage according to price fluctuations. The possibility that such mechanisms could amplify selling during a sharp decline is still pointed out.
Therefore, one cannot say that a ‘mechanical chain reaction of selling will never happen.’ However, unlike the situation in 1987, where reliance on a specific mechanism was highly concentrated, the current market is composed of diverse participants and methods. Also, if mechanical selling proceeds excessively, participants who buy against it will appear, working to correct price distortions.
Central bank responses have become faster
After the 1987 crash, central banks established a stance of rapidly providing liquidity in response to market turmoil. In the subsequent 2008 Lehman Shock and the 2020 COVID-19 pandemic, central banks around the world responded with large-scale capital injections and monetary easing. The expectation that central banks will intervene when the market is in extreme turmoil provides a floor for investor sentiment.
Admittedly, there are currently expectations of interest rate hikes due to vigilance against inflation, so it is not necessarily the case that central banks can ease policy freely. This point could actually be a source of anxiety. However, it can be said that the framework itself is in place for central banks to respond with liquidity provision if a serious situation occurs where market functions stop.
The speed of information transmission and market depth
Compared to 1987, the speed of information transmission is orders of magnitude faster. Bad news is instantly priced in, and prices can move all at once. On the other hand, the range of market participants, such as individual investors, institutional investors, and overseas entities, has expanded, and the depth of trading has increased significantly. The fact that information travels quickly has both the aspect of making panic more likely and the aspect of quickly correcting excessive reactions.
Is there any meaning to the coincidence of dates?
There is no causal relationship between the calendar and the market
Here, let us confirm whether there is any basis for the idea that ‘October 19th is dangerous’ in the first place. In conclusion, the calendar date itself has no power to move the market. What moves stock prices are corporate earnings, interest rates, exchange rates, geopolitical risks, and investor psychology and supply and demand. The fact that the 1987 crash occurred on October 19th was a result of the market environment at that time overlapping, not because of the date.
The day of the week, Monday, also has no special meaning. The name ‘Black Monday’ is simply a name given because the crash happened on a Monday. While it is true that anxieties and bad news accumulated over the weekend are easily reflected all at once at the Monday opening, that is a characteristic common to every Monday.
The true nature of the impression that ‘October is prone to crashes’
The impression that “October is the month of market crashes” is widely shared. Indeed, the crash that triggered the Great Depression in 1929, Black Monday in 1987, and the sharp decline following the Lehman Shock in 2008 all occurred around October. Some statistics show that October has the highest number of significant drops in the Nikkei Stock Average.
However, this is likely more due to the fact that memorable events happened to coincide, rather than there being a statistically certain seasonality. Looking at the year as a whole, it cannot be concluded that the market is particularly prone to falling in October. In fact, there are many instances where the market bottomed out in October and then reversed to an upward trend. It is important not to confuse the strength of an impression with actual probability.
The impact of social media “virality” on the market
Fear is contagious, but it does not necessarily become reality
The situation where posts like “Black Monday is confirmed” spread on social media well illustrates how fear is contagious. Posts that incite anxiety are easy to attract attention and are shared by many people. Furthermore, because futures are actually falling and the volatility index is rising, people find it easy to obtain confirmation that “it is indeed dangerous.”
However, there is a point to be careful about here. Many of these posts contain anxiety, expectations, or a joking atmosphere rather than solid evidence. Even if the word “confirmed” is used, it is often not a definitive prediction but an expression used to attract attention. The fact that a topic is spreading does not in itself mean a market crash. Rather, in a situation where everyone is on guard, bad news is often already priced in to some extent, and the market may not fall as much as expected.
The possibility that anxiety will trigger actual selling
Nevertheless, it cannot be denied that the deterioration of investor sentiment could invite selling, which in turn could lead to an actual decline in stock prices. In particular, those trading with leverage or holding positions on margin are forced to sell when prices fall and they are asked for additional collateral. If such forced selling chains together, it becomes a factor that accelerates the decline.
In other words, it is not the coincidence of dates or the buzz on social media itself that is the cause, but the anxiety accumulated in the market and the distortion of supply and demand that dictate actual price movements. While it is reasonable to interpret the buzz as a sign that the market may be volatile, it is not grounds for a crash of over 20 percent in a single day.
Considering possible scenarios
A scenario where the market falls significantly, but cannot be called a crash
The most realistic scenario is one where, even if there is a scene where stock prices fall significantly on Monday, it does not lead to a catastrophic decline like in 1987. For example, on August 5, 2024, the Nikkei Stock Average fell by about 12 percent, or more than 4,400 yen, in a single day, marking the largest drop in history. At the time, it was called “Reiwa’s Black Monday,” but the next day it rebounded by about 10 percent, or more than 3,200 yen. The pattern of a sharp rebound following a sharp drop has been repeated in the past.
As such, it is not uncommon for the market to recover the day after a significant one-day drop. This is because if the sharp drop is driven by temporary supply-demand imbalances or excessive pessimism, the correction tends to proceed quickly.
A scenario where the decline continues and the adjustment is prolonged
As another scenario, even if the one-day decline is limited, the drop could continue over several days or weeks. If there is deep-seated doubt about the future of investment in AI-related sectors, or if interest rates continue to rise, the adjustment from high levels could be prolonged. In this case, even if a dramatic crash does not occur, the valuation of held assets will gradually decrease.
A scenario where calm is restored at the start of the week
Furthermore, there is also a scenario where the anxiety accumulated over the weekend easily subsides on Monday. After pessimism has spread to an extreme, buying may come in due to a sense of relief that “it wasn’t as bad as I thought,” leading to a rebound. In the world of the stock market, there is also an empirical rule that when many people predict the same direction, the market is likely to move in the opposite direction. When everyone thinks “it will crash,” the market may actually hold up.
No one can say for sure at this point which scenario will unfold. The important thing is not to bet on a single scenario, but to be prepared so that your life and investment plans do not collapse regardless of which development occurs.
Preparations individual investors can make by Monday
Check your positions and leverage
The first thing to check is how much risk you are taking. In particular, those who are buying on margin, holding leveraged products, or using high leverage in FX are significantly affected by price movements. If the market crashes, you may face a margin call or be forced to liquidate your positions. Before Monday, check if you have enough room in your trading capacity.
If you are only holding physical stocks or investment trusts with spare funds, your losses will not be realized unless you sell, even if the valuation drops temporarily. For long-term investors who are not using leverage, a sharp drop over a few days is not necessarily a fatal situation.
Avoid emotional trading
Panic selling your holdings due to anxiety about a crash is one of the mistakes you want to avoid most. Even in the 1987 crash, those who sold near the bottom missed out on the subsequent recovery. Instead of trading impulsively based on hype on social media, make decisions according to your pre-determined investment policy.
Conversely, it is also dangerous to suddenly invest a large amount of money thinking, ‘I’ll buy because a crash is coming.’ No one knows where the bottom is. It is wise to choose a cautious approach, such as buying in increments over time rather than investing all your funds at once while the market is falling.
The choice for long-term investors who have set a policy is to do nothing
For those who are investing a fixed amount every month or continuing to build assets over the long term, the choice to basically do nothing is rational. In dollar-cost averaging, you can buy more units for the same amount when prices fall, so a downturn can be an opportunity to increase future returns. Not being swayed by news or social media and continuing calmly will lead to the most stable results.
Secure emergency funds
The most basic way to prepare for a market crash is to secure enough cash not invested in the market to cover six months to a year of living expenses. With these funds, you won’t need to sell stocks at low prices to cover living costs even if stock prices fall. The principle that investment should be done with spare funds is what makes sense in such situations.
Reconsider how you interact with information
When the market is volatile, it is also important not to chase information excessively. If you check stock prices many times a day, your emotions will be swayed by small price movements. Also, social media is mixed with poorly grounded predictions and information with specific agendas. I recommend checking actual price movements and official announcements from reliable sources and keeping your distance from definitive predictions.
How history teaches us to face market crashes
Crashes have happened many times, but the market has recovered
Looking back at the past, the global stock market has experienced numerous crashes, such as Black Monday, the bursting of the IT bubble, the Lehman Shock, and the sharp drop during the COVID-19 pandemic. Each time, many people were gripped by fear, but from a long-term perspective, the global stock market has recovered over time and reached new highs. Of course, there is no guarantee that this trend will continue. Still, it is a fact that there has been a large gap between the fear felt during a crash and the long-term results.
What is tested during a crash is prior preparation
Even if you think about how to respond after a crash occurs, it becomes difficult to make calm judgments when emotions are running high. The important thing is to check your risk tolerance and decide on a course of action for when the market falls while it is still calm. If you decide in advance how much of a decline in assets you can withstand, how much cash to keep on hand, and whether to continue your savings plan, you won’t have to panic when a decline actually occurs.
Conclusion: How to think about the possibility of a repeat
Let’s organize the possibility of a crash of the same scale as 1987 occurring on October 19th. First, the coincidence of dates or days of the week has no power to move the market. Second, safety devices such as circuit breakers are now in place, making it institutionally very difficult for a decline of more than 20% to occur consecutively in a single day. Furthermore, frameworks for central banks to provide liquidity have also been established.
On the other hand, there are also worrying factors in the current market that cannot be ignored. These include stock prices at high levels, a sense of overheating in AI-related stocks and the potential reaction, rising oil prices and interest rates, geopolitical tensions, and uncertainty regarding monetary policy under a new Fed chair. If these overlap, a scenario where the market drops significantly on Monday or a prolonged adjustment is quite possible. However, this should be seen as the result of risks inherent to the modern market surfacing rather than a repeat of 1987.
The most important thing is not to be swayed by predictions of whether ‘Black Monday will come or not,’ but to be prepared to respond regardless of what happens. Keep leverage low, secure living funds, and stick to your long-term policy. If you follow these basics, you won’t need to act in a panic even if the market becomes volatile.
Furthermore, by the time you read this article, the results for Monday may already be in. In that case, please check the actual price movements and the reasons behind them using reliable sources. Rather than whether the prediction was right or wrong, reflecting on why it happened will cultivate your judgment for the next phase.