For most of today's investors, the stock market collapse of Oct. 19, 1987, was a defining moment — the biggest financial crisis in memory and a stern reminder about the nature of investment risk.On that Black Monday 20 years ago, the Dow Jones industrial average dropped a stomach-churning 508 points or 23 percent — the equivalent of 3,200 points for today's high-flying Dow. It was the second-biggest drop ever for the market, eclipsed only by the war-related Panic of 1914.
While the causes are still debated, the biggest question remains: Could it happen again?
For a quick answer, it is instructive to compare the crash of '87 with the credit crunch that swept through financial markets in August, challenging an untested Federeral Reserve Chairman Ben Bernanke much as his predecessor Alan Greenspan was tested two decades ago.
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