Which 1987 trading-system feature was widely blamed for intensifying the Black Monday sell-off?

Portfolio insurance was widely blamed for intensifying the Black Monday sell-off in 1987.

Portfolio insurance was a computerized strategy designed to limit losses by selling stock-index futures as markets declined. The strategy could create a feedback loop: falling prices prompted more selling, and that selling could place additional pressure on prices.

The theory became especially influential after 19 October 1987, when the Dow Jones Industrial Average dropped 22.6% in one day. Researchers and regulators also examined other factors, including international market declines, valuation concerns, investor psychology, and weaknesses in market infrastructure.

Portfolio insurance did not single-handedly explain the crash. Its role remains part of a broader account of how modern trading methods interacted with a sudden loss of confidence. Afterward, exchanges introduced circuit breakers and other mechanisms intended to slow disorderly declines.