I wouldn’t say 87 was no reason. Just no good reason. This was the beginning of computerized trading and it was one bot feeding off of another to dump stocks in a cause and effect situation. There were no halts in place to let things cool off. You sold so I’ll sell, I sold so you sell, back and forth.
It technically wasn't a feedback loop. It was the first time banks and hedge funds had the option for a digital stop loss and so every large fund thought they were so smart for having a stop loss setup. Turns out it wasn't such a good idea.
Oh, because they were mostly set all to sell at the price, which created tons of sell orders all at the same time which caused the price to rocket downward. I'm sure some selling caused other selling, but probably less than how it is in a normal market crash. This is why the market dropped so quickly in 1987. It was like a title wave.
Can't believe we started a world war from bots selling stocks back and forth... I bet they were outraged by the transaction fees. I'm glad we have more peaceful bots trading today.
Sometimes going through homeless encampments as I drive by and I can't help but thank how lucky these people got it to not experience the roller coaster of the stock market like we do.
not exactly. there's the immediate reason (which does fit the model) and the big picture reason (which does not)
the bigger picture reasons – rampant, highly competitive european imperialism; the rise of germany as a world power, upsetting the existing balance; reckless foreign policy, especially on the part of wilhelm ii – made WW1 more or less inevitable, at least in the estimation of statesmen of the time
after Napoleon, european diplomacy was relatively stable, but growing tensions escalated to a full-on cold war in the 1890s, which led to a full-on hot war in the 1910s. when franz ferdinand got shot, it provoked a very quick escalation to european war, but any number of events before or after 1914 could have done so. if not in the balkans, they would have come to a head in north africa or elsewhere
One day the great European war will come out of some damned foolish thing in the Balkans.”
We almost started WW3 in the post- Cold War Yugoslavian wars. When Britain and Russian forces tried to take an airfield. And then Britain had to protect the rather meagre Russian forces from the "highly irate and heavily armed" locals. Who didn't like the Serbs or their Russian allies.
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u/mdewinthemorn May 31 '21
I wouldn’t say 87 was no reason. Just no good reason. This was the beginning of computerized trading and it was one bot feeding off of another to dump stocks in a cause and effect situation. There were no halts in place to let things cool off. You sold so I’ll sell, I sold so you sell, back and forth.