Black Monday 1987: Seizing Opportunities Amidst Crashes
October 5, 2025
Introduction: Rhetoric Meets the Guillotine
Ah, stubbornness—the noble art of being confidently wrong in the same way, year after year. There’s something almost touching about watching market pundits chant the same tired hymns, convinced the gods will eventually reward their loyalty. They cling to their brittle forecasts like ageing aristocrats polishing rusted silverware, mistaking tradition for accuracy. If they wrote fiction instead of financial commentary, at least they’d have the honesty to label it make-believe.
Every October, the financial media goes through its annual ritual. Like clockwork, the headlines return: chaos, crash, Black Monday revisited. It’s their seasonal horror story, recited with theatrical dread. They warn of ghosts from 1987 but quietly omit the core lesson: opportunity thrives in panic’s shadow. The true disaster isn’t the crash itself; it’s the endless parade of commentators who arrive late to the bonfire, pointing at flames like they just invented fire.
Most panic commentary is reheated fear, served lukewarm. The real move is to act before hysteria peaks—when the Kool-Aid still flows and the crowd still believes the music never stops. By the time the pundits start shrieking, savvy operators are already setting ambushes at key levels, waiting for the stampede to trip over itself.
Navigating Market Sentiment: Strip Out the Noise
When fear spikes, so does the volume of “expert” chatter. They emerge from every corner, bleating their post-hoc wisdom. It’s always the same: bold predictions after the fact, panic dressed as insight. By the time they warn you, the smart money has already moved.
True contrarian action occurs when everyone else is too intoxicated by optimism to notice the cliff ahead. That’s when strategic accumulation begins—quiet, methodical, unglamorous. When the herd finally wakes up, prices are already knifing down, and the commentators start their operatic doom chorus. Acting then is like buying fire insurance during the blaze.
The October news cycle is Exhibit A. Every outlet replays 1987 like a looped horror film:
• “Could History Repeat? Examining the 1987 Stock Market Crash” – Reuters
• “Black Monday Redux? Wall Street’s Concerns on the 30th Anniversary” – Express
• “Is a 1987-Style Market Crash Possible Again?” – USA Today
They ask the wrong question. History doesn’t repeat, but human behaviour does—with embarrassing consistency. The crowd always arrives late, panics loudly, and sells tickets at a discount.
Is a Black Monday 1987-Style Event Completely Off the Table?
No. But expecting a carbon copy of 1987 is like bringing an umbrella because it once rained on the same date. Markets correct; it’s what they do. A crash is dramatic, but a deep correction is entirely plausible. The bigger danger isn’t the event itself—it’s the herd’s reaction.
Every cycle, latecomers rush in at the top, flushed with belated enthusiasm. Then, as prices roll over, they discover gravity and stampede out at the worst possible moment. It’s not an economic tragedy; it’s a psychological ritual. Buy high, sell low, repeat. The chart changes, the actors don’t.
Current sentiment is eerily complacent. Fear is muted despite frothy valuations. That’s a dangerous cocktail. A healthy correction is overdue, and yes, many indices may revisit or undercut their 2022 lows before stability returns. But beneath the noise, the Nasdaq 100 still shows relative strength—a reminder that opportunity doesn’t vanish in downturns; it migrates.
Tactical Signals: Read the Tape, Not the Gossip
The Tactical Investor’s Alternative Dow Theory is flashing negative divergence—an old-school warning sign that momentum is thinning. For a genuine shift to the upside, Dow utilities need to deliver a positive divergence. If they don’t, deeper oversold levels await.
These are not mystical omens; they’re structural tells. While retail investors watch clickbait headlines, seasoned operators monitor divergences, internals, and sentiment spreads. Crashes don’t ambush the prepared. They telegraph their arrival in subtle ways long before the talking heads catch on.
The Real Lesson of 1987: Panic Is a Discount Code
In 1987, the Dow collapsed 22.6 per cent in one day. The headlines screamed apocalypse. The herd fled. But underneath the hysteria, companies with solid balance sheets were trading at fire-sale prices. Those who kept their nerve and bought strategically weren’t just “lucky.” They understood that panic distorts pricing more than fundamentals.
Fast forward six months: many of those positions had doubled. The pundits, of course, rewrote their narratives after the fact, painting themselves as sober realists who “saw it coming.” In truth, they saw nothing. The people who acted were the ones who ignored the choir of fear and trusted their preparation.
Market Sentiment: Crowd Is Not Scared
Bullish sentiment has increased somewhat, and the general public is less anxious than it was at the beginning of the month or last month. However, unless the indicators suggest that this public sentiment has turned euphoric, the possibility of a crash remains unlikely.
For a long-term, multi-month bottom to form, the masses would need to be in a state of hysteria. Until that point, long-term investors should use market rallies as opportunities to build up their cash reserves.
Unprecedented Investment Opportunities Amidst Market Turbulence
Reflecting on historical market bubbles and peaks, a consistent factor emerges euphoria among the masses before the market takes a nosedive. Even in cases like the tulip mania, where mass media was absent, the frenzy ultimately concluded with a sense of euphoria. Without delving further, we must acknowledge the insights from some of our long-term investor subscribers, who view this as a once-in-a-generation buying opportunity.
Assumptions and speculations primarily drove the market sell-off in 2022. This hysteria-induced selling is now creating a rare opportunity for savvy investors.
While the crashes of 1987 and 2008 are often referred to as the “mother of all buying opportunities,” we may be on the verge of a setup that surpasses even these historical events, potentially giving rise to the “father of all opportunities.” Such an occurrence is sporadic, perhaps unfolding only once in a lifetime.
The current landscape may appear tumultuous in the short term, but those focusing solely on short timelines may miss out on the potential for substantial long-term gains.
Why Not Try Something New For A Change:
Once the trend is identified, the remainder of the investing process becomes relatively straightforward. We provide numerous plays for a simple reason – to enable new traders to identify those that appeal to them. Shedding past preconceptions and embracing new concepts takes time, and we strive to simplify the process by providing a diverse selection of plays. Rather than feeling overwhelmed by the number of plays, one should understand that initiating a position in all of them is unnecessary. Choose those that appeal to you and disregard the others until you become familiar with our methodology. With confidence, you can deploy more significant amounts of capital.
Create a list of stocks you would like to own at a discount. When the markets pull back again – and there is a good likelihood that they will test their 2022 lows – you can calmly select the best stocks for pennies on the dollar while the masses panic. As with Black Monday 1987, you can utilise the next corrective wave or crash to establish critical positions in solid companies.
The Psychology Behind Market Crashes
Market crashes, such as those experienced in 1987, 2008-2009, and the COVID-19 crash, are often associated with panic, hysteria, and widespread pessimism. In retrospect, these crashes have proven to be some of the most exceptional buying opportunities of our time, and the strong correction of 2022 is no exception. Understanding the psychology behind these events is crucial to profit from their opportunities.
One key factor in market crashes is the mass psychology of investors. People are prone to panic, often leading them to sell off en masse, exacerbating market volatility. This psychology is evident in the 1987 Black Monday crash, when people panicked and sold their shares. However, investors who remained calm and held onto their shares were rewarded as the market rebounded, providing a tremendous buying opportunity.
Understanding Mass Psychology and Its Impact on Market Downturns
Similarly, the 2008-2009 financial crisis was another example of mass psychology at work. Fear, uncertainty, and widespread pessimism gripped the market as the economic system teetered on the brink of collapse. However, those who remained steadfast and believed in the market’s underlying strength were rewarded as the market bottomed out and started to recover. Again, those who bought into the market then enjoyed significant gains as the market rebounded.
The COVID-19 crash was another example of mass psychology in action. The global pandemic caused widespread panic and uncertainty, leading to a significant market downturn. However, those who held their nerve and recognised that the market would eventually recover enjoyed impressive returns as the market rebounded.
The strong correction of 2022 is yet another example of mass psychology at work. The sell-off was based on conjectures and assumptions rather than underlying fundamentals, and this hysteria-based selling created a rare opportunity for the intelligent investor. As with previous market crashes, the market will rebound, and those with the foresight to invest now will be rewarded.
Understanding the psychology of the masses is critical to profiting from market crashes. The masses panic, sell their shares, and create opportunities for those who remain calm and believe in the market’s strength. It is essential to stay level-headed, focus on the long term, and recognise that market downturns are temporary and present exceptional buying opportunities.
Market crashes, such as the 1987 Black Monday, the 2008-2009 financial crisis, the COVID crash, and the strong correction of 2022, are long-term buying opportunities based on mass psychology. By understanding the psychology behind these events, investors can remain calm, hold onto their shares, and capitalise on the opportunities presented by market downturns. The key is to stay focused on the long term, recognise that market downturns are temporary, and provide exceptional buying opportunities for those with the foresight to invest.
Conclusion: Clarity Cuts, Panic Pays the Bill
Markets will convulse again. Maybe not like 1987, but they will. When cracks appear, pundits will flood the airwaves with retroactive genius. Headlines will blare. Social media will froth. Retail traders will stampede, selling solid assets at liquidation prices to the patient few, sharpening their knives.
History doesn’t reward hysteria; it punishes it. In 1987, panic sellers handed blue-chip stocks to disciplined buyers at fire-sale valuations. In 2008, those who had dumped bank shares in despair watched institutions like Goldman Sachs double in value within two years. During the 2020 COVID crash, retail fled in terror while funds quietly loaded up on Amazon, Nvidia, and Apple—names that went on to carve new all-time highs. Stupidity isn’t neutral in markets. It gets invoiced.
Euphoria always precedes the fall. Tulip mania in the 1630s, the dot-com bubble of 1999, housing in 2007—same psychology, different costumes. Every era thinks it’s smarter than the last. Every era proves it isn’t.
The next major dislocation won’t be a surprise. The only question is whether you’ll be part of the stampede or the small, focused minority reading the foundation while everyone else gawks at the flames. Market crashes are not doomsday events; they’re transfer mechanisms. Wealth moves from the distracted to the deliberate, from the emotional to the analytical, from the herd to the hunter.
Clarity under pressure isn’t optional. It’s the entry ticket. Those who cultivate it will view the next panic the way the smartest operators viewed 1987, 2008, and 2020—not as a catastrophe, but as an invitation.
Obstinacy is the result of the will forcing itself into the place of the intellect.
Arthur Schopenhauer
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