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đŸ‘‡Today, let's look back at the greatest tail events of the past 30 years and see what we can learn. Tail events are very large, rare stock market deviations that have major consequences for investors. The first tail event is the 1987 crash. #tailhedge #risk 
The most consequential crash in United States history. Luckily, the Federal Reserve cut interest rates fast enough to prevent what could have been a complete collapse of the financial system.
Did we learn anything? The true severity of market crashes is hidden by past data.
Did we learn anything? The true severity of market crashes is hidden by past data.
Before the crash of 1987, the worst down days were close to 13%, 50 years earlier during the Great Depression. In late October 1987, the market lost close to 23%.
The prices for options changed after the crash of 1987. Now, traders priced in a skew to the downside.
The prices for options changed after the crash of 1987. Now, traders priced in a skew to the downside.
