On October 19th, 1987, the Dow Jones Industrials Average plummeted 22%. That one-day drop, the largest in U.S. history, became known as Black Monday.
The 30th anniversary of the ’87 crash is here tomorrow, and so is the potential for another huge drop.
In fact, another crash isn’t just possible, it’s probable.
Once again, seemingly smart Wall Street products, pregnant with potential unintended consequences and combined with regulatory ignorance and complicity, practically guarantee it.
Here’s what caused the crash in ’87, and the chilling truth about the one thing that’s different this time that will make the next crash worse…
The latest version of regulatory and Wall Street whack-a-mole is, as usual, going to miss the target.
In the “never-ending battle for truth, justice, and the American way” – and, oh yeah, profits – big investment and trading banks announced a major new change. All the big banks you know and love are about to charge the money managers they execute trades for, and service in ways most of you have no idea, an arm and a leg for research.
It doesn’t matter if the research is ineffective, which most of it is. It doesn’t matter if it’s valuable insider-type information, which some of it sometimes is. Banks are going to charge a pretty penny for it.
Why? Because it’s worth it, darn it.
And because new regulatory rules will force them to hold their hands out.
Here’s what Morgan Stanley reportedly wants to bill $2500 an hour for, and whether or not it’s worth the price tag…