Art Hogan, who was four years into his career on Wall Street when Black Monday hit, said a bomb could hit that markets were unprepared for.
On the 30th anniversary of the 1987 stock market crash, United States stocks are at a record high and investors are concerned that steep valuations may mean a correction is overdue.
Speaking on CNBC, Mr Hogan said there was “always something a little different” that could hit.
But he added trading would be halted at its current cap of a dramatic 20 per cent decline from the previous day’s closing price, a measure to stop the 22.6 per cent fall on October 19, 1987.
Putting it to Mr Hogan that the market was unpredictable, the CNBC host said: “In 1987 we thought we were all modern, we thought we had things figured out, this whole automated hedging stuff that we now know was a big part of that decline, was supposed to be an innovation, not necessarily a source of risk.
vCard.red is a free platform for creating a mobile-friendly digital business cards. You can easily create a vCard and generate a QR code for it, allowing others to scan and save your contact details instantly.
The platform allows you to display contact information, social media links, services, and products all in one shareable link. Optional features include appointment scheduling, WhatsApp-based storefronts, media galleries, and custom design options.
“I guess the big question is, you just never know, except under stress, how a market’s going to behave.”
Mr Hogan agreed but said there were measures in place to avoid past crashes.
He said: “Well we learnt that again in 2007, 2009 and every time it’s a little bit different, these markets repeat, they rhyme historically as we say in the Almanac.
“But there’s always something a little different and there’s something that comes new, there’s new innovations, we found that out with the mortgage crisis, with the dot-com bubble.
“So there’s probably something out there that I’m not smart enough or well-versed enough to know but there might be something.
“I just don’t think we’re going to get that, they’re going to turn it off before 20 per cent and there’s all sorts of breakers that are going to stop it before it gets to that.
“So we can stop and breath and assess what’s there. They’ve capped it at 20 per cent so we’re probably not going to get 23 per cent again.”
On Monday October 19, 1987, following large declines on Asian and European markets the previous week, the Dow Jones Industrial Average plunged 508 points, or 22.6 per cent, for the biggest-ever single day decline in percentage terms by the blue-chip benchmark.
In response to the 1987 crash, the US Securities and Exchange Commission mandated the creation of market-wide “circuit breakers” that call a temporary halt to trading after the Dow declines 10, 20 and 30 percent.
Only one market-wide halt has been triggered since then, in 1997.
The circuit breakers were adjusted in 2012, lowering the thresholds needed to trigger a trading pause, with the Dow replaced by the S&P 500 stock index as the benchmark index.