You Were There: Friday the 13th Mini-Crash
October 13, 1989 — The day the LBO dream died
The silence of your home office suddenly becomes a liability. On a trading floor, you'd hear the roar of the crowd first. Here, you just see a ticker freeze.
9:30 AM ET #
The morning starts deceptively well.
You're sitting in your home office — a rare privilege in 1989 — staring at the amber glow of your new setup. It's likely a dedicated dumb terminal, or perhaps a high-end 386 PC running DOS with a modem that screams a 2400-baud handshake every time you connect to the exchange.
The coffee is fresh. The house is quiet. The novelty of avoiding the commute feels like a victory.
The market opens flat. Sleepy, even. For a few hours, you think your boss was right: it's just a lazy Friday.
2:40 PM ET #
The "lite trading day" evaporates.
1. The Catalyst: UAL News #
The silence of your home office suddenly becomes a liability.
On a trading floor, you'd hear the roar of the crowd first. Here, you just see a ticker symbol freeze — or a headline crawl across the bottom of your screen in pixelated monochrome text:
UAL BUYOUT COLLAPSES.
The deal for United Airlines — the one everyone was banking on to keep the leveraged buyout boom alive — has failed. Financing couldn't be secured.
In an instant, the entire thesis of the 1980s bull market is in question.
2. The Lag #
This is the most terrifying part of trading from home in '89.
As panic selling hits, the data feed to your remote terminal starts to choke. The quotes aren't real-time anymore — they're delayed by seconds, then minutes.
You see prices ticking down, but you know the reality on the floor is already far worse.
You try to punch in a sell order. The command line hangs.
The blinking cursor mocks you.
3. The Freefall #
The Dow Jones Industrial Average doesn't just dip. It dives.
In a matter of minutes, the index sheds over 190 points. In 2026 numbers, that sounds like nothing. But in 1989, that's nearly 7% of the entire market vanishing in an hour.
It's the second-largest point drop in history at that time — dwarfed only by the '87 crash two years prior.
Junk bonds, which fueled the entire decade's excess, are suddenly toxic. You watch symbols for arbitrage plays turn into falling knives.
4. The Isolation #
You desperately call the desk.
Busy.
You call again.
Busy.
Without the shouting of colleagues or the squawk box to guide you, you're flying blind in a storm. You realize why "work from home" hasn't caught on yet — when liquidity dries up, being the guy on the phone instead of the guy in the pit is a dangerous disadvantage.
The information asymmetry isn't theoretical anymore. It's the difference between getting out and getting buried.
5. The Close #
The market closes, mercifully, stopping the bleeding.
The Dow finishes down 190.58 points.
You sit back in your chair, the hum of the computer fan the only sound in the room. You've just witnessed the end of the roaring '80s LBO era, all from your spare bedroom.
You suspect that come Monday morning, your boss might not be so keen on this "telecommuting" experiment anymore.
What It Revealed #
The Friday the 13th Mini-Crash wasn't as catastrophic as Black Monday two years earlier. But in some ways, it was more instructive:
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Leverage cuts both ways. The LBO boom was built on borrowed money. When one deal collapsed, it revealed how fragile the entire structure was.
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Remote trading is a disadvantage. The lag, the busy signals, the isolation — these weren't just inconveniences. They were the difference between executing a trade and watching helplessly as your position disintegrated.
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Information travels at different speeds. The guys on the floor knew before the tape did. The guys at home found out last.
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Market sentiment can turn in an instant. One failed deal. That's all it took to end a decade of irrational exuberance.
The Aftermath #
The crash accelerated the end of the junk bond era. Michael Milken, the "Junk Bond King," would be indicted just months later. Drexel Burnham Lambert, the investment bank that had fueled the LBO boom, would collapse in 1990.
The markets recovered, eventually. They always do.
But the people who got caught on the wrong side of a 2400-baud modem that Friday afternoon? They learned a lesson that wouldn't be taught in any trading course:
When the market moves, it doesn't wait for your connection to catch up.
Why This Matters to You #
You might think 1989 is ancient history. Modems are gone. Terminals are gone. We have fiber optic connections and sub-millisecond execution now.
But the fundamental problem hasn't changed.
When volatility spikes, retail platforms lag. Order routing slows down. The "instant" execution you were promised turns into a queue. And while you're waiting for your sell order to fill, someone with better infrastructure has already gotten out.
You're still the guy in the spare bedroom.
The pit just moved to a data center in New Jersey.
This is part of the "You Were There" series — first-hand and reconstructed accounts of market events that broke people, systems, and assumptions.
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