Part 3: Chapter 17, The Humbling Summary and Analysis

Drexel was still hanging and waiting a year after Boesky Day. Issues were being discussed in the press but nothing had come out of the grand jury yet. In October 1987 the stock market crash occurred which was thought to bring an end to the bull market. Many critics claimed that a recession would bring down the junk bond market, especially since the quality of junk had been deteriorating. "In the October 1987 crash, junk bonds did fall in price, with the average junk portfolio losing at worst about 10 percent of its value. This was not surprising, since they are really part debt, part equity, and their value tends to fluctuate with the equity markets as much as or more than with the bond markets, their key variable being less the direction of interest rates than the...