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In 1987 Every Exit Closed at Once. Last Week Two Stayed Open.
At 7:00 a.m. Eastern on Monday, October 19, 1987, U.S. Navy destroyers shelled Iran’s Rashadat oil platform in the Persian Gulf. It was retaliation for a Silkworm missile that struck the U.S.-flagged tanker Sea Isle City in Kuwaiti waters late on October 15, according to President Reagan’s letter to Congress. Two and a half hours later the New York Stock Exchange opened. By the close, the Dow had lost 508 points, or 22.6%, to finish at 1,738.74.
This morning is Monday, October 19 again. 2026 shares 1987’s calendar date for date, since both years open on a Thursday. Tankers have been reported hit near the Strait of Hormuz, crude just had its best week since July, and over the weekend “Black Monday” trended on X, per The Kobeissi Letter. The resemblance is real. Most of it is surface.
The week before rhymed. In 1987 the damage started Wednesday, October 14, when the Dow fell 3.8%, and deepened Friday with a 4.6% loss. The S&P 500 dropped 9% that week. Last week’s selling landed on the same two days, with the Nasdaq down 1.9% on Wednesday and 2.2% on Friday. Chipmakers took the worst of it, the corner of the market that had carried the most hope and the most crowded bets. That is why it fell hardest.
The bond market did the opposite. In 1987 the 10-year Treasury yield climbed from 7.18% on the first trading day of the year to 10.23% on Friday, October 16, per Federal Reserve data, adding nearly 0.3 points in that final week alone. Stocks and bonds fell together. A balanced portfolio had no cushion, and the presidential task force that studied the crash, the Brady Commission, later found margin calls running about ten times their normal size. Last week the 10-year yield fell 0.15 percentage points, to 5.09%, even as wholesale inflation printed its hottest annual reading since 2022 and crude rose 10%. Investors sold chips and bought Treasuries. A Treasury still pays you in dollars, though, and the debt behind it keeps growing. Some firms worry less about this week’s yields than about what those dollars will buy in ten years, and one of them makes that case directly.
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The national debt has crossed $40 trillion.
When you started saving for retirement, you expected Social Security, Medicare, taxes, and the rules around your money to remain relatively predictable. But while you were working and building your nest egg, Washington was borrowing.
Now, the cost of that borrowing is growing...and retirees may feel it through a quieter threat: a dollar that buys less each year.
Since 2020, the dollar has lost roughly a quarter of its purchasing power. A retirement account can appear unchanged on a statement while the cost of groceries, insurance, property taxes, and healthcare continues to climb.
Meanwhile, central banks have bought more than 1,000 tonnes of gold per year for three years running.
This Free 2026 Wealth Protection Guide explains why some retirees are paying attention, why stocks, bonds, funds, and cash can share the same dollar-based exposure, and how physical gold and silver differ from paper assets.
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On September 30 this letter showed the bond sleeve losing about 6% in a quarter when stocks rose. Last week it earned its keep. A simple 60/40 mix, 60% in an S&P 500 fund and 40% in a total bond fund, lost roughly 0.8%, against 4.5% for the Nasdaq. On $800,000, that is about $6,600 on paper, compared with roughly $36,000 for the same sum tracking the Nasdaq.
One call I made early. On October 12 this letter read a falling barrel, through a hurricane and a strike on Riyadh, as the commodity market pricing a slowdown. Five sessions later WTI was up 10.4%, driven by a U.S. crude draw roughly 30 times what analysts expected, per the Energy Information Administration, and new reports of tanker attacks. The barrel is pricing supply again. It showed up in the producer price report too: the Labor Department said energy accounted for more than 80% of September’s 1.3% jump.
Money changed seats. A crash needs a crowd running for the same door. Last week the crowd split. Consumer staples, energy and health care each gained more than 3%, and the Dow finished higher while the Nasdaq slid. The VIX, Wall Street’s fear gauge, closed Friday at 19.99. Its average since 1990, from Federal Reserve data, is 19.4. I read that as a market repricing one bet, the AI build-out, and parking the proceeds in companies that pay you to wait. The louder voices on Wall Street have gone further and named a single stock for exactly this kind of tape.
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The configuration to watch. The setup that hurts a balanced investor is the one from 1987, and again from 2022: stocks and bonds falling on the same days. This week brings two tests. Meta, Tesla, IBM, Lam Research and Texas Instruments report after Wednesday’s close, the first hard look at whether the AI spending that just cost chip stocks 11% is still accelerating. Friday’s early business surveys, the flash PMIs, show whether companies are passing higher costs along to customers. Soft earnings alongside hot prices would push yields up while tech falls, and that is the week to pay attention. The Fed meets October 27–28.
It also helps to remember how 1987 ended. The Federal Reserve’s own history notes that no recession followed, and the S&P 500 regained its pre-crash high on July 26, 1989. The investors who paid the most were the ones forced to sell into the hole. The useful question this morning is simpler than any anniversary: when your stocks fell last week, did your bonds rise?
Last week was a rotation with a frightening anniversary attached. The real warning is the day your bonds fall alongside your stocks, and last Friday they rose.
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