Special Report: Ten Years After The Crash

You might think that the more things change the more they stay the same on Wall Street. Twenty years after the crash of 1987, the market is at or near a record high on any given day. Such was also the case in 1997 on the the 10-year anniversary of the crash, which abruptly and briefly interrupted the greatest bull market in history.

Looking back on 1987 in 1997, it all seemed a bit mystifying. The Dow had basically jumped five-fold from its close on October 19, 1987. The Go-Go 80s had been replaced by a Go-Go 90s. Wages and employment were on the rise, the housing market was booming and the great American consumer was driving the economy. In '97, the Dow Industrials were aat 8000 and the bull market wasentering its 15^th year

Much like we are today, CNBC in 1997 -- naturally enough -- took an indepth look at the crash of 1987 and how it compared with current times.  CNBC anchors Bill Griffeth, Sue Herera and Ron Insana -- all of whom covered the crash for FNN  before later moving to CNBC after its launch in 1989 -- had a unique perspective to share in the special report "The Crash of ’87: Will It Happen Again", which originally aired on the network.

For market mavens, gurus and geeks alike, we 've decided to bring the program to the Web.

Part I -- Go-Go '80s

The program takes a look back at some of the defining characters and moments of the booming 1980s, from real-life arb Ivan Boesky, who was convicted of insider trading, to the Hollywood-creation Gordon Gecko, who uttered the famous words, "Greed, for lack of a better word, is good," in the film "Wall Street".

By 1987, the young bull market of the 1980s had turned into a seemingly unstoppable creature, which took stocks to record high after record high in a dizzying ascent that peaked in August.

After an unventful September, October reminded investors that it was the cruelest month. The market declined for two weeks, culminating in the crash on the 19th.

As one Wall Street said of Black Monday: "In the final hour every got the sense that the gate was closing, so every rushed for that gate."

Part II -- Demystifying The Meltdown

The iniitial doom and gloom was unfounded and by 1997 it seemed the market had lived happily ever after. A poll at the time showed 90% thought the crash ofg '87 had no lasting impact. Only 20% said it creaed even a mild financial hardship. and an equally small number saw the possibioity of another market meltdown by the end of the millenium.

Yet, some argued that there was more at stake in 1997 then ten years ago. The speculative froth had added a populist twist. A new generation of millionaires and celebrities was being created, this time thanks to the high tech boom. P/E ratios were at 21,  versus 23 a decade ago.

Fundamentally, though, times had changed -- especially when it came to two bogeymen of '87 -- the dollar was strong and the budget deficit was down (and on the way to disappearing). Another big difference -- stock investment had replaced home equity as the great wealth barometer and feel-good factor.

So had one important thing at the NYSE. Chairman and CEO Dick Grasso said exchange officials had learned one important lesson from '87, when trading volume swamped the system. The NYSE had built technological capacity that could and would exceed demand should their be another day of panic and stampede.

Part III -- The Big If

So, similarities and differences aside, the reasonable question to ask is whether a crash can happen again. A poll at the time saw respondents almost split 50/50 on the possibility of another meltdown before the end of the millennium. Only 10% though saw it happening in the next year.

Money managers Michael Steinhardt and Marty Zweig seemed to share the overall optimism.

Steinhardt says the "exalted valuations are justified by world events," referring to a time of healthy world growth, low inflation and relative peace. Zweig, meanwhile, describes himself as "cautious and bullish".

As for exactly happened in 1987, Zweig, who called the crash, says he was was expecting a 15% correction and warned that a move of that size would "trigger an avalanche" of trading.

Steinhardt adds that the "internal mechanism of the market were not prepared for the onslaught that 1987 was all about."

In what's become a more popular view of the crash and its import, Steinhardt says history shows "stock markets have been predictors of change," but the decline of '87 "was a harbinger of nothing."