A friend of mine who has been a stockbroker for over 30 years recently told me that Black Monday was a veritable walk in the park versus what happened with The Credit Crisis and continues today. Mind you, he was on drugs when he said that.
Yes, he was on prescribed medication which he simply referred to as "happy pills" to help him deal with the stress of the prolonged market malaise and the effects it had on his work hours, the barrage of information he had to process, and the many calls he took from clients who ranged from perturbed to distraught.
His analogy was that 1987 was like being shot, whereas the last three years are more like going 12 rounds with Mike Tyson.
Black Monday holds the record for the single largest percentage loss for both the Dow Jones industrial average (-22.61%) and the S&P 500 (-20.47%) by a country mile.
But if we look at the top 20 daily losses in percentage terms in the history of the S&P 500, we find only three days from 1987 (five days if you include 1988 and 1989) but 11 days from 2008 to 2011. So yes, looking at the last few decades, it would seem that The Credit Crisis has been a prolonged, painful beating down of investors whereas Black Monday was initially paralyzing, but over relatively quickly.
Of course, the S&P 500 only goes back to 1957 so we are omitting data from the Great Depression. To include that we need to look at the Dow. In this case, 1987 and the surrounding years only account for two of the worst 20 days. Twelve of the top 20 daily losses occurred before the inception of the S&P 500, centring mainly on 1929 to 1933. Only four days from the last three and a half years make this list.
The second biggest percentage drop in history for the Dow was on Oct. 28, 1929 (-12.82%), and it should be noted that the third biggest percentage drop for the Dow was the very next day, Oct. 29, 1929 (-11.73%). This, plus the high number of significant down days during this period overall means the Great Depression would be like getting shot and then being punted into the ring for 12 rounds with a feisty professional boxer. Messy.
JP Morgan Funds offer some additional insight. The Great Depression yielded a 26.7% reduction in real gross domestic product, but the most recent recession (although perhaps the first dip of a double-dip recession) was only a 4.1% decline.
Imagine what kind of happy pills my friend would have needed back then.