Which 1987 trading mechanism was widely blamed for accelerating the Black Monday market crash?

Portfolio insurance was widely blamed for accelerating the Black Monday market crash in 1987.

Portfolio insurance was a computerized strategy designed to limit losses by selling stock-index futures as markets declined. On 19 October 1987, falling prices triggered more selling, and the resulting feedback loop was widely cited as one reason the decline became so rapid.

The Dow Jones Industrial Average fell 22.6% in a single session, while other markets also plunged. Later investigations concluded that portfolio insurance amplified the fall, but did not establish it as the sole cause. Market structure, investor behavior, valuation concerns, and international economic tensions also mattered.

Portfolio insurance should not be confused with ordinary insurance or a guaranteed protection against losses. Its effectiveness depended on being able to sell quickly in functioning markets, precisely when many participants were trying to sell at once.