Today's Record and 19 Years Ago Today

Quotes of the day:
“God is not dead but alive and working on a much less ambitious project.”
--Anonymous

"We should look inward and think about the meaning of our life and its purposes, lest we do it in 20 or 30 years and it's too late."
--Robert Coles

For the first time in history, today the Dow Jones Industrial Average closed above 12,000. Also, it was 19 years ago today that the Dow dropped 22 percent in one day. If it happened today, it would be a 2,600-point drop. Then, it was more than a 500-point drop.

On October 19, 1987 I was a financial reporter for KPBS in San Diego. I remember being very deliberate and reassuring in explaining exactly what all the numbers were--I wasn’t sure anyone would believe them. It was an amazing day.

What became clear in subsequent days is that the precipitous drop had been fueled by what became known as “program trading.” It turns out that many, many traders had programmed their systems to automatically sell when certain stocks declined to certain levels. Once the market began a significant decline, it quickly became a free fall.

This was clear evidence of the profusion of machine-generated trading, and resulted in some new safeguards from the stock exchanges. More important was the emotional impact.

Many investors were spooked. And the scare headlines in the newspaper didn’t help. But long-term investors seemed to take it in stride. Within months, things were back to normal.