

2014 crash will be worse than 1987's - spking
http://www.cnbc.com/id/101573688

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at-fates-hands
You know what's interesting which he doesn't even mention? High frequency
trading - which a lot of people think was the problem in 1987'. In 87' they
just called it "computer trading" and it obviously worked a lot differently,
but I believe the parallels are still there.

[http://en.wikipedia.org/wiki/Black_Monday_%281987%29](http://en.wikipedia.org/wiki/Black_Monday_%281987%29)

"A popular explanation for the 1987 crash was selling by program traders, most
notably as a reaction to the computerized selling required by portfolio
insurance hedges.[10] However, economist Dean Furbush points out that the
biggest price drops occurred when trading volume was light.[11] In program
trading, computers perform rapid stock executions based on external inputs,
such as the price of related securities. Common strategies implemented by
program trading involve an attempt to engage in arbitrage and portfolio
insurance strategies. As computer technology became more available, the use of
program trading grew dramatically within Wall Street firms. After the crash,
many blamed program trading strategies for blindly selling stocks as markets
fell, exacerbating the decline. Some economists theorized the speculative boom
leading up to October was caused by program trading, and that the crash was
merely a return to normalcy. Either way, program trading ended up taking the
majority of the blame in the public eye for the 1987 stock market crash. U.S.
Congressman Edward J. Markey, who had been warning about the possibility of a
crash, stated that "Program trading was the principal cause."[12]"

