Investing

Jeremy Siegel says 1987 crash was like a 'freight train ran everyone down'

Key Points
  • Jeremy Siegel recalls the 1987 stock market crash in an interview Thursday on CNBC's "Power Lunch."
  • "It was like a freight train ran everyone down," Siegel said. "That was the biggest one-day drop in history. It was double the next highest. … There has been nothing like it before or since that date."
Scott Nations: People forget 'Black Monday' catalyst was Iran
VIDEO3:2903:29
Scott Nations: People forget 'Black Monday' catalyst was Iran

Jeremy Siegel recalled the 1987 stock market plunge in an interview Thursday on CNBC's "Power Lunch."

The "Black Monday" crash, when the Dow Jones industrial average plunged 508 points, occurred 30 years ago Thursday.

"It was like a freight train ran everyone down," Siegel said. "That was the biggest one-day drop in history. It was double the next highest. … There has been nothing like it before or since that date."

The Wharton School finance professor explained how investors falsely believed they were insured against a market drop through the use of "portfolio insurance" products, which exacerbated the decline.

The longtime bull also noted the strange coincidence of major historic crashes occurring in the same month. He cited the years 1929 and 1987.

"What's really amazing, a huge percent of crashes occur in the month of October," he said. That's "puzzling why October is seemingly the worst month."

Siegel is known for his bold bullish market predictions. His investing book, "Stocks for the Long Run," released in 1994 recommended investors take a long-term optimistic view on the stock market.

In July 2015, he said on CNBC that the Dow Jones industrial average could hit 20,000 by the end of that year. When it didn't by November, he reiterated his belief in Dow 20,000, but pushed his timeline to 2016. The Dow broke the mark on Jan. 25, 2017.

The Dow reached 23,000 for the first time on Tuesday.