Think of Wall Street, the October 19 1987 ‘Black Monday Crash’ will come to mind for many. The 23 per cent single-day crash in the Dow Jones that day stunned everyone and rocked global markets. This fall was on top of a cumulative 10 per cent crash in the previous three trading days. It looked like the ‘end of the world’ to some in Wall Street. But, in hindsight, the crash looked more like an aberration rather than any structural change in market trend. Within two days, the Dow Jones recovered 57 per cent of what was lost on Black Monday, although it took more than a year to recover the entire loss. Despite the hit it took, the Dow Jones actually closed up 2.3 per cent for the year.
However, the consequences and learnings from the crash were profound and long lasting. One among those was the destiny of a then 23-year-old Andy Constan who was working as corporate finance analyst at Salomon Brothers. He was chosen as Salomon Brothers’ representative in the “Presidential Task Force on Market Mechanisms’ or what is known as the Brady Commission, formed by the US President Ronald Reagan to investigate the causes of the ‘Black Monday Crash.’ The circuit-breaker mechanism in place in stock exchanges across the world, including in India, is an outcome of recommendations in the report by the Brady Commission.
Constan, who graduated with a degree in Bio-engineering from the University of Pennsylvania in 1986, has since spent 35 years investing and trading global equities, spending 17 years at Salomon Brothers including heading its global derivatives business. Following this, he started honing his macroeconomic knowledge in 2010 working at Bridgewater Associates and Brevan Howard. Since then, he has worked on growing Damped Spring Advisors – a macroeconomic research firm specialising in Hedge Fund Strategy.
In an exclusive interview to bl.portfolio, Andy Constan, CEO/CIO, Damped Spring Advisors, connects the dots and decodes the puzzle amid turmoil in the US markets.
