Portfolio Insurance and the 1987 Crash

America literally broke its own stock market in 1987 and nobody saw it coming. On Black Monday,

the Dow Jones dropped 22 percent in a single day. The crash happened so fast that trading

systems couldn't keep up. Phones melted from panicked calls. But here's the crazy

part: a new invention called portfolio insurance was supposed to protect investors. Instead,

it created a feedback loop that accelerated the crash. Computers automatically sold stocks which

triggered more selling which triggered more computers to sell. The entire system

became a self-destructive machine that wiped out billions.