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

Tyler Durden's picture

The best thing about veteran traders, such as Art Cashin, is that they have truly seen it all, not just one or two gyrations of the business cycle, or in most cases, half. Which is why we are delighted to share this anecdote from the grizzled UBS trader and Fermentation committee chairman, of his personal remembrances on this anniversary of the day in which the Dow Jones plunged than 22%, and has since entered popular folklore as Black Monday.

An Encore Presentation

On this day in 1987, the stock market suffered its worst crash of the 20th Century, even worse than 1929. The Dow lost 22% in a single day. Each year as the anniversary of the great ’87 crash approaches, I get requests from what has become a steadily dwindling number of ’87 veterans to repeat my follow-up poem, “The Insurer”. For survivors of October ’87, the memories are seared into our psyches not unlike veterans of some great battle. For, as in a battle, not all who participated survived (financially). It was an amazing couple of weeks in which the wheels almost did come off the locomotive. Someday, maybe I’ll write a book about it.

Anyway, below we repeat the poem. It was written in the manner of Edgar Allen Poe’s, “The Raven”, though it lacks even a scintilla of his talent and clarity…..somewhat like a stick figure rendering of the Mona Lisa. But… do the best you can.

While all of the references will be familiar to veterans of ’87, I have learned some folks who read these “Comments” were in Pampers at that time. So we’ll give a quick one paragraph synopsis of the background to the ’87 crash.

A Brief 1987 Recap – Even if there had been no “October Surprise”, the year 1987 would have been a remarkable one for Wall Street. The Dow started the year below 2000 and ran to 2722 by early Fall. (A gain of nearly 38%.) The rally was breaking all the old rules. A group of guys in Chicago came up with a new rule called Portfolio Insurance ( or Dynamic Hedging) which might be synopsized as buy strength/sell weakness (we’ll explain another day). The U.S. dollar was weak and the subject of controversy. There was some conflict and confrontation in Iran (U.S. bombing Iranian oil platforms). The President’s wife and right hand had gone into the hospital for a rumored cancer operation. And there was a new SEC chairman who was misquoted in the midst of the free-fall suggesting that maybe markets should close. The misquote greased the skids.

Okay, that’s enough background. Now - “The Insurer”

Once upon a Monday dreary
Traders waited worn and weary
As they gazed upon news tickers
warning of the day in store

Foreign markets were imploding
sending senses of foreboding
With positions overloading
sellers would be bringing more
To dump upon a bloody floor

October now had past its middle
as investors faced this riddle
With their Quotrons they would fiddle
looking for The Bull of yore

Greenback's value falling quickly
trade deficit behaving sickly
And with Iran, relations prickly
raised the specter of a war
Ahead a day that promised gore

So on the open there came selling
much faster than the tape was telling
While in Chicago they were yelling
"Dynamic hedging" is no more!

Specialists were inundated
as futures prices unrelated
Kept the selling unabated
stocks once eight now sell at four

Futures dipped below the cash now
and insurers made a dash now
Trying not to be the last now
rushing for the exit door

Then news reporters often shrewder
began misquoting Chairman Ruder
A trading halt?...a new intruder
caused yet more panic on the floor

Bethesda had a guest named Nancy
an operation somewhat chancy
Helped to make the markets antsy
adding to our selling lore

Throughout the day as prices melted
brokers, dealers all got pelted
And bank accounts not safety-belted
were blown away forever more

The bell, it rang to end the sorrow
while traders ran to banks to borrow
To have an ante for tomorrow
not knowing what it held in store

Two dozen years have since gone by *
with circuit breakers now we try
To tame computers gone awry
and restore calm upon the floor

The Dow now stands full six times higher *
than when it closed that day so dire
despite two wars and terror fire
the Bull arose to run some more

This anniversary, headlines new *
dwell upon that day we rue
They ask us veterans to review
a time that left us scared & sore

Yet chills we get from déjà vu *
fear that banks may run askew
While trading partners threaten too
as in that sad October yore.

But keep your faith it’s a new day *
though there are hints that skies may turn gray
We’ll hope such clouds won’t bring a blue day
let’s hope the Bull returns once more!!


*Updated Revisions

We revisit the ’87 crash each year because it was truly unique. The Dow fell over 22% in one day. That would be a single day drop of over 3000 points in today’s market. From the year’s high to the low of the 19th, the Dow fell nearly 40% in under two months. None who were there shall forget it.

A Personal Remembrance – On Black Monday, I was running the Floor for PaineWebber. I arrived early in the morning to check out the systems and the staffing. We expected a tumultuous day since the Dow had fallen 10% the week before, including an unprecedented 108 point drop at the close of Friday’s Expiration. (The largest point drop in history at the time.) With all systems checked, we headed up to the dining room of the Luncheon Club for a quick cup  of coffee. The place was jammed with other nervous early arrivals. A buzz developed as word spread that several foreign markets were imploding – down 8% to 10%.

Some of the other traders would kid me about my penchant to throw in an occasional Latin phrase in stressful or strange situations. (Four years of Jesuit Latin can build odd habits.) One broker approached my table, put his right hand across his chest and said “Moritori te salutamus esse”. It was an  approximation of the fabled gladiator’s salute – “We, who are about to die, salute you”. I nodded in response and we all headed for the floor to face the  unknown. It is a moment in my life I shall never forget.

From: UBS

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Cognitive Dissonance's picture

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.  :>)

redpill's picture


The Revolution will not be televised!

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?

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?

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.


Vergeltung's picture

great read. thank you for sharing.

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.

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.

jm's picture

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

jm's picture

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

Thisson's picture

Simple: he didn't trade his own account.

AngryGerman's picture

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

baby_BLYTHE's picture

A global currency crisis is on the doorstep

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."


"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.


Bwahaha WAGFDSMB's picture

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

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.

BeerGoggles's picture

The 24th anniversary. who fucking cares.

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

Temporalist's picture

You don't have to read anything.

ZippyDooDah's picture

Just ask your Mom to stop reading to you.

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.

SheepDog-One's picture

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

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.

mjk0259's picture

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

Dburn's picture

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

RobotTrader's picture

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?

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.

ZippyDooDah's picture

You could get tolcocked for attacking a legend.  Just sayin'.

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.

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.

RonBurgundy's picture

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

Peter K's picture

No excuse for sloppy grammer. And Latin at that.

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.

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.

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.

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...!

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.

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.

JW n FL's picture



the government is the market!

since Black Monday!



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?

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..


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.

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.


Gringo Viejo's picture

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

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).

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.

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.