Art Cashin Shares His Personal Experience On The Anniversary Of Black Monday

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Wed, 10/19/2011 - 11:26 | 1789005 Cognitive Dissonance
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I remember this day very well. I was a fresh faced rookie so I didn't really understand what the hell was happening. A babe in the woods, baptism by fire. Ignorance truly was bliss for me.  :>)

Wed, 10/19/2011 - 11:34 | 1789049 redpill
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Forgive the OT:  "BLACK THIS OUT" MONEY BOMB TODAY, HELP PLEASE: www.ronpaul2012.com

The Revolution will not be televised!

Wed, 10/19/2011 - 11:52 | 1789142 JW n FL
Wed, 10/19/2011 - 12:46 | 1789375 TrafficNotHere
TrafficNotHere's picture

Anniversary of Black Monday? But its Wednesday!

Wed, 10/19/2011 - 12:00 | 1789173 Unprepared
Unprepared's picture

"I have learned some folks who read these “Comments” were in Pampers at that time"

So my parents lied to me when they explained that the reason I was dick-in-the-air in that photo was because there were no Pampers at that time?

Wed, 10/19/2011 - 12:22 | 1789286 Cognitive Dissonance
Cognitive Dissonance's picture

Silly boy. Parents and governments lie to you all the time for your own good. Didn't you get the memo?

Wed, 10/19/2011 - 13:08 | 1789450 Billy Bob
Billy Bob's picture

I also remember that day very well!

On Friday, 10/16/1987, My wife and I had our home demolished and site cleared for the new home that had been in planning for the past 6 months.  Over the weekend, we were laughing about how our renovation timing was just perfect.. the house gets torn down and the market collapse.  Little did we know what was to follow.

I was a Sr. VP of Paine Webber and was used to listening to Art on the Morning Call, and through out the day, and then his closing comments.  He was normally a joy to llsten to, humorous, and most of us looked forward to his sqawk box calls.

But on Monday, he sounded as scared as I was.......and like all of us, had no idea what to expect.

All of us know what ultimately occurred in the market, but for my wife and I, it was the loss of most of our money, most of our 401-K and IRA money, and the money of most of my clients.  It was clear with in a week that it also meant the loss of a 20 year career. 

I had made all the mistakes most new brokers make and had found that I was most successful working in niche markets where I could be a significant influence in maintaining a market.  I found the small commercial bank and S&L stocks in the late 1970's, and built a very sucessful book of business working with the shareholders, bank executives and directors of numorous small commercial banks, and then very attached to the S&L industry.

The S&L's were having a bad go of it in 1987 with all the "Non-Performing Performing Loans" that had been created by the changes in the tax law by the Congress. What the Crash of '87 did was destroy the OTC market for the stock, preferred stocks and convertible preferred shares that represented the capital of the industry.  That market never did return and shortly the entire industry was toast.  Lots of bankers ended up in prison, but the damage was really done prior to the Crash by the Congressional Lawmakers.... .the crash just exposed the problems.

In addition, the Crash of '87 finished off the old cadre of Registered Reps trained by the big firms in the '60 and early '70s.......or at least the ones who never felt comfortable being the "Asset Gatherers" for the big firms who wanted its sales force to bring in money to be managed by the firm and to use products produced by the firms, and to receive compensation based on "Assets Under Management".  The big firms won that battle with their sales force, and all of the brokers who knew the industry as Art Cashin did have long left the industry.

So, yes, this article by Art Cashin is indeed a trip down memory lane.  Maybe more than I wanted to remember.

Bill

Wed, 10/19/2011 - 13:46 | 1789580 Vergeltung
Vergeltung's picture

great read. thank you for sharing.

Wed, 10/19/2011 - 17:50 | 1790500 lieutenantjohnchard
lieutenantjohnchard's picture

down memory lane. cashin on the corner on the squawk box as i remember it. shared a terminal with a veteran as a rookie right after i got my license with p/w. good training. but i sure was glad to leave. felt lied to and cheated after the cold call cowboy (he was the guy p/w trainees were supposed to emulate on cold calls) was outed as a fraud.

Wed, 10/19/2011 - 16:27 | 1790220 Howard_Beale
Howard_Beale's picture

I was a fresh options trader at the time, OTC options on MBS to be specific. It was one of the most amazing days of my life. The bond market was moving as fast as the equity market and managing the 3 billion in underlying to try to stay delta neutral was impossible running on our 286 computers. Many mortgage options desks blew up completely that day-gamma explosions. Mortgage bankers were calling the mortgage desk freaking out to hedge their pipelines. I was pricing vol at 70%. None of them thought that was unreasonable. The entire bond floor was going nuts.

What a day it was.

Wed, 10/19/2011 - 20:51 | 1791041 jm
jm's picture

That's some pretty bad shite, Howard Beale...

Wed, 10/19/2011 - 11:25 | 1789012 jm
jm's picture

I'd like to ask Art Cashin how he managed to survive so many years.

Wed, 10/19/2011 - 11:28 | 1789026 Thisson
Thisson's picture

Simple: he didn't trade his own account.

Wed, 10/19/2011 - 11:35 | 1789056 jm
jm's picture

Thumbs up, dude.

Wed, 10/19/2011 - 11:26 | 1789016 AngryGerman
AngryGerman's picture

...and then i went ahead and sold forward-settling ETFs to nobody and blew 2bln." Kweku Adoboli

Wed, 10/19/2011 - 11:28 | 1789020 baby_BLYTHE
baby_BLYTHE's picture

A global currency crisis is on the doorstep

Wed, 10/19/2011 - 12:00 | 1789174 Snidley Whipsnae
Snidley Whipsnae's picture

"A global currency crisis is on the doorstep"...

The BIS, among others, believe you are right. The BIS smears the debt pig world with lipstick, making every attempt to spin central banks and governments as well meaning but over zealous. A conclusion that I don't share but, what the hey, they are PHD economists and I'm nobody.

A couple of observations from the BIS...

"The debt problems facing advanced economies are even worse than we thought."

and...

"Debt is rising to points that are above anything we have seen, except during major wars. Public debt ratios are currently on an explosive path in a number of countries. These countries will need to implement drastic policy changes. Stabilization might not be enough."

Really? lol

Here is a pdf link to a long read if anyone is interested in seeing just how much lipstick can be smeared on the world debt pig...and how much blame can be shifted from the banksters and government puppets that enabled it.

http://www.bis.org/publ/othp16.pdf

 

Wed, 10/19/2011 - 20:19 | 1790954 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

A global currency crisis is chillin on the living room couch with it's feet up on the coffee table

Wed, 10/19/2011 - 11:32 | 1789029 SheepDog-One
SheepDog-One's picture

Dont worry, Timmah and Ben have emptied the markets, and taken total control... there will be no more market plunges. All your markets are belongs to us...we have assumed control....we are legion.

Wed, 10/19/2011 - 11:31 | 1789038 BeerGoggles
BeerGoggles's picture

The 24th anniversary. who fucking cares.

Do we have to read this shit every year?!??!?!!

Wed, 10/19/2011 - 11:45 | 1789107 Temporalist
Temporalist's picture

You don't have to read anything.

Wed, 10/19/2011 - 12:13 | 1789245 ZippyDooDah
ZippyDooDah's picture

Just ask your Mom to stop reading to you.

Wed, 10/19/2011 - 11:32 | 1789040 Henry Chinaski
Henry Chinaski's picture

I'll always remember Black Sunday, Oct 18 1987, the day that Mary Ellen broke my heart.  But I got over it, just like the market got over Black Monday.

Wed, 10/19/2011 - 11:35 | 1789047 SheepDog-One
SheepDog-One's picture

This is boring Art....I wanna hear some of your stories about them FLAPPER GIRLS from the Roaring 20's!

Wed, 10/19/2011 - 11:37 | 1789062 machineh
machineh's picture

Latest excuse for an earnings miss -- ANIMAL ATTACK!

BOSTON (MarketWatch) -- Ohio police armed with assault rifles were on the hunt Wednesday for dozens of potentially dangerous wild animals that were released from a Zanesville wildlife preserve by their owner, who later committed suicide, according to media reports. Roughly 48 animals are believed to have escaped the privately-owned preserve, located roughly 50 miles east of Columbus. The animals include wolves, grizzly bears, tigers, and cheetahs. As of Wednesday morning 39 of the animals had been reportedly shot by police, while personnel from the nearby Columbus Zoo attempted to subdue others with tranquilizer darts or lure them back to their pens with food. Area schools, along with many local businesses, have been closed until further notice. Ohio officials have likewise advised that residents stay indoors and avoid unnecessary travel until further notice.  


http://www.marketwatch.com/story/dangerous-animals-on-the-loose-in-ohio-...

Wed, 10/19/2011 - 11:39 | 1789073 mjk0259
mjk0259's picture

Bears on the loose? How come the market is up?

Wed, 10/19/2011 - 11:54 | 1789152 Dburn
Dburn's picture

They're very frustrated Bears, like me. I'd like to eat some human flesh too.

Wed, 10/19/2011 - 11:39 | 1789076 RobotTrader
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Art Cashin is a legend.

 

However, poor Art Cashin is too old to understand the markets in today's HFT and Algo/Igor/Robo world, he's getting out of date.

Unfortunately, he's trying to compete by playing one on one hoops with LeBron James, and his pants are around his ankles.

No way he can keep up with the young ones, the hordes of Red Bull - swilling daytraders now working at the biggest funds, buying whatever is "working" and selling whatever is going down.

How else can he explain retail stocks going wild during the worst recession in modern history?

How else can he explain AEM collapsing 18% to 3-year lows during the greatest gold bull market in world history?

Wed, 10/19/2011 - 12:11 | 1789235 Dismal Scientist
Dismal Scientist's picture

Because AEM had a mine flood and a write off of $170mn. I normally enjoy your posts Robo, but that was just dumb. Sharpen up.

Wed, 10/19/2011 - 12:16 | 1789257 ZippyDooDah
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You could get tolcocked for attacking a legend.  Just sayin'.

Wed, 10/19/2011 - 12:28 | 1789312 Raynja
Raynja's picture

The market does what it does, whether men trade it or computers programmed by men trade it. Id much rather hear someones opinion that measures what they have seen in decades, not months.
This depression is on the same scale as the 1930s, but trying to say which is worse is foolish.

Wed, 10/19/2011 - 12:40 | 1789359 lieutenantjohnchard
lieutenantjohnchard's picture

highly predictable comment from a punk of little accomplishment. while the 'tard is processing 1099's part time art cashin is well ... art cashin, a man revered by folks who know wisdom when they see and hear it.

but like i said, the 'tard has made similar comments about jim sinclair. so it's totally within his purvey to slime art in similar fashion even as 'tard lives happy meal to happy meal in his 600 square feet hole of an apartment overlooking a smogged los angeles freeway.

Wed, 10/19/2011 - 14:03 | 1789661 T-Bond
T-Bond's picture

Well said!

Wed, 10/19/2011 - 11:40 | 1789078 RonBurgundy
RonBurgundy's picture

The Latin is actually Nos Morituri Te Salutamus! (no need for the esse, its a future active participle)

Wed, 10/19/2011 - 11:55 | 1789156 Peter K
Peter K's picture

No excuse for sloppy grammer. And Latin at that.

Wed, 10/19/2011 - 11:42 | 1789095 s2man
s2man's picture

I was off living in the woods.  I'm glad I missed the '80s.

Now, I'm part of the system, with a "professional" job, a 401k, and all the accoutrements.  And I'm back in the woods.  Only this time, it is not for some hippie philosophical reason, it is for survival.  Long land, food and water.

Wed, 10/19/2011 - 11:43 | 1789099 T-Bond
T-Bond's picture

I was in the S&P pit that day as a local trading for my own account. What I remember most was around mid morning a 3000 point (over 10%) S&P sell off in about 5 minutes that was absolutely bidless. The orderfillers were offering the market 500 points below the prices posted on the board. At the end of the day many of the traders wondered if there would be a market the next day. Now we know it was the buy of a lifetime.

Wed, 10/19/2011 - 13:20 | 1789494 newstreet
newstreet's picture

There was a sign posted at the NYFE the next day.  It said "DO NOT HONOR THESE BADGES".  44 names were on the list.

Wed, 10/19/2011 - 14:05 | 1789669 T-Bond
T-Bond's picture

Similar at the merc.

Wed, 10/19/2011 - 11:44 | 1789104 TradingJoe
TradingJoe's picture

Hell Yeah! I just received my trader "vows" one little year earlier, June 1986, i didn't knew shit about what was happening around me, just had massive sell orders all day, that day! Was a big one for me! Was called "kiddo" all day:"did you shit your pants kiddo? how's that ulcer coming kiddo, etc etc"! man! If you went thorough somethign like that and you're still around, well then...!

Wed, 10/19/2011 - 11:45 | 1789109 Peter K
Peter K's picture

Remember it well. A young options trader on the CME. At 8:30, when the S&P pit opened, went over and was just watching. An old timer came up to me and said "turn over your badge, so you don't get anything put into you". Whenever I went by that pit, always instinctively looked at my badge.

Wed, 10/19/2011 - 14:17 | 1789728 T-Bond
T-Bond's picture

Many of the IMM guys that traded currencies or Eurodollars came in the S&P pit to watch the mayhem and they would turn their badge over for fear of a desperate local plugging a trade into them. That was the wild west for sure.

Wed, 10/19/2011 - 11:46 | 1789115 JW n FL
JW n FL's picture

 

 

the government is the market!

since Black Monday!

http://en.wikipedia.org/wiki/Black_Monday_(1987)

SOMO

POMO

and / or whatever Mc-Fucking-Twist name you would like to spin for public consumption..

 

so, the real question is.. since this shit has been going on since I was 15 years old.. and no one ever said anything until now.. why is it on heavy rotation on corporate owned media?

http://en.wikipedia.org/wiki/Black_Monday_(1987)

http://www.federalreserve.gov/pubs/feds/2007/200713/200713pap.pdf

http://research.stlouisfed.org/publications/review/04/03/Neely.pdf

Because they want it in heavy rotation..

NONE of YOU! are smart enough to even keep up let alone think ahead.. but recently, the most saturated, dumbed down version of the world.. EVER! figured it all out! BY ITSELF!! LOL!!!

You know what they want you to know and when they want you to know it.

that's it, there is nothing else..

the few that have the facts, don't share the truth.. http://www.youtube.com/watch?v=5j2F4VcBmeo

 

Wed, 10/19/2011 - 11:48 | 1789125 lieutenantjohnchard
lieutenantjohnchard's picture

i remember it, too. the old bunker ramo computers used then were frozen solid basically from the previous friday through a few weeks afterwards. ibm bidding $90 asking $120 is a memory. but most of all it was the jammed phone lines into the brokerage office that marked the day(s), although i can't remember a single angry client. most took it kinda matter of fact.

Wed, 10/19/2011 - 12:01 | 1789177 Dburn
Dburn's picture

I had a small manufacturing company. I was logged into CompuServe. At the end of the day the Market was down 26% compared to the 22% in 1929. We were nervous as hell because we had a million dollar line of credit at the bank. The next day it gapped down 100 points and finally it snapped back. At the end of the day, I called my loan officer: "Hey, uh, everything alright over there? No panic?", to which she replied "over what?". Of course this was in fly-over country.

Two weeks later Drexel Burnham called asking if we needed money. "Can you handle 5 Million at 14%?" I was thinking of $700,000 interest payments but said "sure no problem, what do you need from us?" "Just a business plan". "No tax returns, financials ?". "Nah, this is small deal, we'll have it sold in an hour". I hung up and knew they were toast.

 

Wed, 10/19/2011 - 12:04 | 1789189 Gringo Viejo
Gringo Viejo's picture

And the market has been a rig job from that day forward.

Wed, 10/19/2011 - 12:07 | 1789206 chindit13
chindit13's picture

I was there, too.  It was still a place run on paper.  At the end of the day, there was about 4-6 inches deep of paper on the NYSE floor.  There were small investors rushing the guards to get on the floor to "find some broker who can sell for me".  By midday, the moonbats and religious types had set up tables on Broad Street saying "the end is nigh".  It wasn't.  Tuesday morning was even scarier, as about 1100 the entire market went bidless.  I was listening to the squawk box from the CME and could hear the traders yelling "call out the full handle, dickheads".  That was the bottom.

On October 4th, I remember checking out of the money puts on S&Ps.  I don't remember the strike, but I do remember the price...the equivalent of $25 per contract.  On the 19th or 20th, they traded at $25,000 per contract.  I did not buy any, but did learn the lesson, which I was lucky enough to put to work years later in another market where we had a 20% downmove while vol jumped from about 15% to 60%.  Chasing tail (risk).

Wed, 10/19/2011 - 14:40 | 1789706 T-Bond
T-Bond's picture

the traders yelling "call out the full handle, dickheads"

 

I remember that. The reason for that was, prior to the crash the market had never seen anything even close to that price range and at times on the day of the crash, there were two different markets in the pit at the same time. It was so nuts it would be trading at one price on one side of the pit and several handles different on the other side. The arb clerks quoting the prices to the phone clerks were quoting different markets at the same time. Many times the locals in the pit had no idea where it was at any given point.

Wed, 10/19/2011 - 12:28 | 1789308 weebles
weebles's picture

I was working as a  clerk for a big options trader in the OEX pit at the CBOE back then. I still can recall how stunned everybody in the pit was. What was a very bustling and hectic pit on a daily basis was reduced to hearing a pin drop. Traders just staring at the monitors, rumours floating around  about which firms might be in trouble.

Wed, 10/19/2011 - 12:29 | 1789316 wang (not verified)
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