Commodity Strategies: High-Profit Techniques for Investors and Traders

Preface

For those who were investing at the time, it was the most remarkable, previously unfathomable, day in market history. For those who were not yet investing, it was still a day of mythical proportions. The day I am referring to, naturally, is Monday, October 19, 1987. At Dorsey, Wright & Associates (DWA), we came to work expecting business as usual, but by day's end we experienced the largest one-day percentage drop in the Dow Jones Industrial Average ever recorded. The Dow Jones dropped roughly 23 percent in one day, and after that the media began proclaiming a replay of 1929. DWA had been in business exactly 9 months and 19 days when this happened.

That day was significant to our corporate history because that single session changed the entire direction of DWA. It was as if we were moving from one train track to another. You see, we started out as an “Outsourced Options Strategy Department,” primarily servicing firms that did not otherwise have this type of department in-house. The blame for the crash of 1987 was initially placed squarely on the shoulders of the options market, however, and in particular portfolio insurance strategies and naked put sellers. Some firms were said to be on the verge of going under because of the options liability exposed on that fateful day. For most firms, though, things worked out. The market eventually rebounded, and today the tales of that one market session are legendary. Most advisers haven't been in the business long enough to have ...