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. Last Updated: 07/27/2016

10 Years Later, Wall Street Grown Up

NEW YORK -- Memories of the Oct. 19, 1987, stock market crash still haunt many Wall Street veterans, but as the "decade of greed" has given way to worries over retirement savings, so has the stock market moved on.


Wall Street today is a vastly different place than it was in the '80s: Like its brokers and bankers, it is more sophisticated, informed, technology-savvy and cautious.


"Wall Street has grown up and the population has aged," said Bill Meehan, chief market analyst at Cantor Fitzgerald. "When I have free cash flow, I use it far differently than I would have 10 years ago."


On Black Monday a decade ago, the Dow Jones Industrial average tumbled 508 points, or 22.6 percent.


But since then, shares are up and the Dow trades near 8000, riding a sea-change of information, demographics and technology -- which is making it fast, easy and efficient to trade stocks.


Traders who worked Black Monday said a total collapse of the internal trading system was one of the biggest problems behind the market plummet.


"On the day of the crash, the whole trading system backed up," said Peter Coolidge, senior equity trader at Brean Murray & Co. "You couldn't get liquidity, and you could not get market makers to answer the phone because every order was a sell."


That day, Coolidge said, Nasdaq was jammed with "locked markets," when bids matched offer prices, and "crossed markets," when offer prices were less than bid prices. Some prices did not change for days, while others were halted for hours.


Today, computers replace telephones as the way to trade, and Nasdaq has set up systems that make it necessary for traders to act on markets within minutes.


"Our 10 heaviest trading days took place in 1997, and we had no glitches," Nasdaq spokesman Reid Walker said.


The Internet has given rise to a glut of information and many news services that give facts on companies. Shares fall in seconds on rumors circulated in an electronic chat room or buried in the back pages of a trade magazine.


More sophisticated gadgetry has also given birth to a host of new trading exchanges, which have taken business away from the stalwart New York Stock Exchange.


"In the good old days, there were three places to do business -- the New York, Amex and Nasdaq," said Doug Myers, vice president of equity trading at Interstate/Johnson Lane. "Now, orders come from the Arizona, Posit and the Internet. Every mom and pop has started an execution network."


The volume of shares changing hands has soared in the past 10 years, fueled by the rapid growth of mutual funds and managed pension plans.


Such funds have emerged as people who spent buckets of money in the 1980s have grown older, curbed splashy spending habits and plan to retire.


Many traders on exchange floors recall the crash vividly and are always wary it will happen again. There is an edge of skepticism in this market that was missing in 1987, they say.


"Nobody was expecting the crash in 1987," Coolidge said. "It hadn't happened in so many generations.