Show Notes
Episode 16: Can you imagine another "Black Monday" in the stock market? On October 19, 1987, the S&P 500 plunged 20.5%, the biggest single-day drop in history. Panic selling occurred in markets around the world.
A new product from US investment firms, known as "portfolio insurance," had become popular and it accelerated the crash's pace as initial losses led to further rounds of selling, according to the US Federal Reserve. https://www.federalreservehistory.org/essays/stock-market-crash-of-1987 Today, such a massive market decline may seem impossible to many investors. That's probably because the event itself led to significant reform in how the stock market operates. After Black Monday, regulators developed new rules, known as circuit breakers, allowing exchanges to halt trading temporarily in instances of exceptionally large price declines. The goal was to help restore a well-functioning in the midst of a crisis. Among the many lessons learned from Black Monday is the importance of investor resilience. From January through August of 1987, the S&P 500 climbed more than 40%. After Black Monday, it was suddenly under water. But by the end the year, the S&P 500 finished with a 5.2% gain—which hardly seemed possible on October 19. The lesson is that markets usually overcome what at the time seem like unprecedented challenges. Black Monday in 1987, the Asian Financial Crisis of 1997–1998, the dotcom bust of 2000, the Global Financial Crisis of 2008, COVID-19 in 2020—markets weathered them all. Each crisis can feel like the end of the world when it happens, yet the stock market has recovered after each crisis. Remember what happened in 2020: The S&P 500 finished the year with a gain of 18.4% even after plummeting at the start of the pandemic. Research shows it's virtually impossible to predict where the market will go today, tomorrow, or anytime in the future. So nobody really knows when or whether there will be another Black Monday.
The takeaway for long-term investors is to stick with your plan if the market drops, knowing stocks can rebound sooner than you might think. In Episode 16 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, crank up their time machine to look back at Black Monday and look ahead to how investors should handle a massive drop if one happens again. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/
More from The Informed Investor
Episode 62: Happy Halloween—or is it? At this moment, some investors are probably chewing their fingernails down to nubs as they try to digest the latest frightening financial headlines. "Are Global Stock Markets Headed for a Crash?" "The American Dream of Owning a Home Is Out of Reach for Many as Mortgage Rates Soar (Again)" "The US Debt Tops a Record-Shattering $40 Trillion. Yes, with a T." Eek!! Those are actual headlines from recent articles in the financial media (and just a small sample). Hundreds more are just waiting to scare the bejabbers out of you. But as an investor, if you're worried about the current state of the stock and bond markets, the economy, or the latest geopolitical hot spots, headlines are the last place to look for reassurance. Many, if not most, are designed to make you afraid. The facts, on the other hand, will often do just the opposite. In Episode 62, a special Halloween episode of The Informed Investor podcast, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, dress up … and then dress down the headline writers of America to help investors deflate the fear factor. LINKS FROM TODAY'S EPISODE: "Stay Calm: Learn to Embrace Uncertainty in Investing and Life" Order the new book by Dimensional Founder David Booth https://www.amazon.com/gp/product/B0GPDHGH8K/?maas=maas_adg_2F97289929AB0BA26D806A1F81D55D66_afap_abs&ref_=aa_maas&tag=maas&smid=ATVPDKIKX0DER Subscribe to the Stay Calm Investing Newsletter https://www.staycalminvesting.com/newsletter?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor For US audiences: Select videos are available as part of an opportunity for CFP® and Investments & Wealth Institute® professionals to earn continuing education (CE) credits https://www.dimensional.com/financial-professionals/ce-credit-experience-d360?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor The Informed Investor: Feedback Survey https://www.dimensional.com/us-en/informed-investor-survey?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor "The Informed Investor" on YouTube The Informed Investor - YouTube Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-d-4105b98/ Learn more at https://www.dimensional.com/?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor
Episode 61: The allure of index funds, such as broad diversification, low costs, and market-matching returns, may seem undeniable. But recent "reconstitution" in the indexes tracked by such funds tells a different story—one every investor should understand.
Episode 60: Every two years, millions of investors probably ask themselves (and their advisors) whether looming elections demand changes to their investment portfolios. It's an understandable sentiment—and one that demands discussion. But the most important conclusion from these conversations should never change: Since the data doesn't show any strong connection between election results and stock market performance, it's best to vote with your ballot, not your portfolio. No matter how you slice, dice, or take a hatchet to the data, factor in your own political proclivities, or scream about what you think is totally wrong or right about the candidates, market prices have already incorporated all that information (and thousands of other developments, including numerous economic indicators) as investors consider what to do next. This is a well-researched theory of how capital markets work. The implication is that the stock market doesn't really care what you think about this year's midterm elections or the next presidential horse race. Need supporting evidence? Fourteen of 17 presidential terms since 1929, across administrations with both Democratic and Republican chief executives, ended with positive returns for the S&P 500 Index. (S&P data © 2026 S&P Dow Jones Indices LLC, a division of S&P Global.) Investors shouldn't ignore elections, of course. But their portfolios may benefit from standing pat as politics rile and emotions rock and roll. In Episode 60 of The Informed Investor podcast, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, interrogate common myths about the impact of elections on markets and offer sensible answers as investors head to the polls. LINKS FROM TODAY'S EPISODE: "Stay Calm: Learn to Embrace Uncertainty in Investing and Life" Order the new book by Dimensional Founder David Booth https://www.amazon.com/gp/product/B0GPDHGH8K/?maas=maas_adg_2F97289929AB0BA26D806A1F81D55D66_afap_abs&ref_=aa_maas&tag=maas&smid=ATVPDKIKX0DER Subscribe to the Stay Calm Investing Newsletter https://www.staycalminvesting.com/newsletter?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor The Informed Investor: Feedback Survey https://www.dimensional.com/us-en/informed-investor-survey?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor "The Informed Investor" on YouTube The Informed Investor - YouTube Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-d-4105b98/ Learn more at https://www.dimensional.com/?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor For US audiences: Select videos are available as part of an opportunity for CFP® and Investments & Wealth Institute® professionals to earn continuing education (CE) credits https://www.dimensional.com/financial-professionals/ce-credit-experience-d360?utm_source=youtube&utm_medium=organic&utm_campaign=informed_investor
Episode 59: What happens when you rethink how financial advice is delivered—and how an industry comes together?
Episode 58: Any financial professional who joined the industry a week after Black Monday—when the stock market suffered its biggest single-day loss—knows something about investment discipline.