Abstract
The October 1987 crash of stock prices is a largely unexplainable event, much like any other setting of prices in the stock market, only larger. If anything the market operated efficiently in moving prices to a new level that tended to persist for many months thereafter, thus indicating that the crash was not an overreaction. Statements by the SEC chairman concerning a possible trading halt and the halt in index arbitrage trading probably added to the volatility. Attempts to limit volatility by regulation are misguided and will prove damaging.
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