Wall Street saw a brutal sell-off today, with the major market indexes - Dow Jones, S&P 500 and NASDAQ - dropping respectively 2.64% (367 points), 2.56% (39 points) and 2.65% (74 points). The slide reflects, among other things, a continued concern about credit and housing issues, rising oil prices, falling dollar value, and uncertainly on Fed’s next move.

This is still only a scratch on the surface compared to what happened this day 20 years ago. In what is now termed the infamous Black Monday, US stock market recorded the largest one-day crash in its history on October 19, 1987. That fateful day, Dow Jones crashed 23%, and S&P 500 dropped 21%.

Dow would have had to lose almost 3200 points today to match a 23% loss. That is a huge number for a single day drop. Can it happen again? Theoretically yes, but unlikely. There is still controversy on what exactly went wrong on black Monday. But there are several safety measures in place today to prevent a similar catastrophe. This includes improved monitoring of stock trading, and also computerized access that allows investors to execute transactions by themselves.

See related posts:

1. Riding the boom-bust wave
2. Investing abroad in turbulent times
3. A layman’s take on market fluctuations