The Lesson of Uncle Lou
Key Takeaways
- Even the worst crashes recover: The 1987 “Black Monday” crash saw the Dow Jones plunge 22.6% in a single day—yet markets fully recovered within 22 months.
- Panic is the investor’s enemy: Emotional discipline and perspective are vital during market volatility; panic selling often leads to lasting losses.
- Quality dividends create stability: Quality, dividend-paying companies can provide stability and income through even the worst downturns.
- Patience pays off: Patience and a long-term focus remain the foundation of successful investing – just as true today as it was in 1987.
Lessons from Black Monday 1987: Why Patience Still Pays for Long-Term Investors
I’ve told this story before, but it bears repeating—especially when things aren’t so bearish.
I was a young broker assistant during the infamous Black Monday crash of October 19, 1987—the worst single-day percentage loss in U.S. market history. On that Monday, the Dow Jones Industrial Average plunged 22.6%. Including the prior Friday’s decline of –4.6%, the Dow’s two-day loss reached –27.2%.
The brokerage room I sat in was pure madness. Phones rang off the hook, people were shouting, and fortunes were evaporating. Yet, in the middle of all that chaos sat Uncle Lou, calm as could be—coffee in one hand, bagel with lox in the other, reading the paper. He might have even been working on the crossword puzzle.
Uncle Lou wasn’t anyone’s actual uncle, but rather an admired elder statesman of the office. He came in each day more for the camaraderie than the commissions. Lou was a World War II veteran who had been captured by the Nazis, escaped, and ran across the fields of France—only to turn around and head back toward the Germans because, as he said, “the Russians were worse!” This was a man who had literally seen the world fall apart—and survived it. His calmness amid the chaos on Black Monday was striking, and something I needed to understand.
I made my way over and asked, “Uncle Lou, why aren’t you upset? Everyone else is losing their minds.”
He looked at me and said, “Why are you upset? You don’t even have any clients yet.”
“Well,” I said, “I’ve got one—my father. He’s my only client.”
Lou nodded. “What stock did you buy him?”
“Exxon,” I said. “For the dividend.”
Uncle Lou took a slow sip of coffee, folded his paper, and said, “Son, Exxon’s got a bigger fleet than the U.S. Navy. That dividend is rock solid. Just tell your father to batten down the hatches and sit tight.”
He went back to his crossword puzzle, occasionally taking calls for other brokers just to calm their clients in the same reassuring way.
I think about Uncle Lou often. His quiet confidence on that chaotic day in 1987 wasn’t denial—it was perspective. He understood that real wealth comes from owning strong businesses that keep paying you through good times and bad. Markets will always have moments that feel like the world is ending, but that’s usually when patience pays the most.
The lesson he left me was simple: don’t sell when it feels unbearable—own quality, stay calm, and keep collecting the dividends. It’s one of the reasons I’m such a proponent of taking retirement income distributions from portfolio income only, whenever possible.
Dow Jones Industrial Average: 1987 Crash and Recovery
The Dow Jones Industrial Average plunged nearly 23% on Black Monday, October 19, 1987 – its largest one-day percentage drop in history. As shown here, it took nearly two years, until August 1989, for the market to fully recover to pre-crash levels. Source: ACM Wealth
It’s important to note that it took 22 months, from the August 1987 peak to the August 1989 recovery, for the Dow to fully regain its level. That’s remarkably fast given the magnitude of the decline—faster than the post-dot-com or 2008 recoveries—and it underscores a timeless investing truth: Even the worst one-day drop in history didn’t derail long-term investors who stayed invested.
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