“Those who do not learn from history are doomed to repeat it.”

Throughout stock market history, October has often been a month of crashes, investor freak-outs and market meltdowns. And after a huge rally from the March 2009 bottom, there has been plenty of talk over what will happen this October. Some believe it will keep pushing higher, while others are expecting it to plummet.

Sometimes the best way to determine the future is to take a good look at the past. So we prepared a stock market history quiz to see if you have learned your lesson or are in need of a refresher course. Take our quiz now to see how much you really know about the market.

Question #1

True or False: A trade deficit of $15.7 billion was one of the causes of the October 1987 stock market crash.

Question #2

On another Oct. 14 (this time in 2008), the federal government took big steps to keep money flowing through the financial system by forcing nine major banks to accept partial nationalization. Which of these banks was not involved?

A) Bank of America

B) Morgan Stanley

C) Wells Fargo

D) None of the above

Question 3

Two bear markets have ended on the same October date in 1990 and 2002. What was the date?

A) October 5

B) October 10

C) October 27

D) October 9

Question #4

True or False: It took a month for the market to recover from its losses on Black Tuesday, Oct. 29, 1929.

Question #5

How many shares were sold by investors on Black Thursday, Oct. 24, 1929?

A) 7 million

B) 12 million

C) 13 million

D) 41 million

Question #6

Who was responsible for ending the Panic of 1907?

A) Theodore Roosevelt

B) J.P. Morgan

C) William McKinley

D) Charles Fairbanks

Question #7

True or False: President Carter signed the Humphrey-Hawkins full employment bill on Oct. 27, 1978, which immediately reduced unemployment by 4% and inflation by 3%.

Question #8

True or False: Upon bottoming out on Oct. 29, 1990, the market then went up 382% by early 2000.

Question #9

In the midst of our current economic crisis, we’ve seen numerous banks fail. But one of the biggest of all time happened on Oct. 8, 1974. Which bank bit the dust that day?

A) Franklin National Bank of New York

B) First Republic Bank of Dallas

C) Gibraltar Savings

D) Southeast Bank of Miami

Question #10

True or False: Here’s some recent history for you: On Oct. 28, 2008, the same day that consumer confidence reaches an historic low and home prices fall 16%, the market rallies to post its second-largest gain of the year.

 

Question 1: True – While there was a long list of reasons for the first dip, the trade deficit announcement on Oct. 14 was a proximate cause. The subsequent fall in the U.S. dollar and sharp rise in interest rates helped fuel the subsequent fall of the Dow during the following four days.

Queestion 2: D – The government went after major financial institutions in this move, including all the ones listed. The program was considered voluntary, but the Treasury and the Fed made an offer the banks ultimately couldn’t refuse. Oct. 14 was also one of the most volatile days of 2008, with the Dow trading in an 874-point range.

Question 3: B – The 30-month bear market of 2000-2002 ended at 10:10 a.m. on Oct. 10. In 1990, a mini-bear market ended on the same day when the Dow reached a low of 2,365. This was caused in part by news of a tax hike, which also ended President Bush’s 1988 pledge of “Read my lips; no new taxes.”

Question 4: False – Black Tuesday saw the market fall to 230 on the Dow as a record 16.4 million shares traded hands. But recovery came only one day later, when the third best market day in history pushed the Dow back to 258.47 — just shy of where it started on Oct. 29.

Question 5: C – Sell orders began piling up the night before Black Thursday, when investors were panicked to sell at any price. A record 13 million shares were sold before the panic was stemmed at 1:30 p.m., when Richard Whitney, director of the New York Stock Exchange, stepped to the center of the floor and said loudly, “I will buy 10,000 shares of U.S. Steel at $205.”

Question 6: B – When the New York Stock Exchange came knocking on J.P. Morgan’s door for cash, he immediately called all the major bankers to his office. Within five minutes, he had raised $27 million. They further created a plan to use clearinghouse certificates to increase the money supply by $84 million. Problem solved!

Question 7: False – Well, it did work, but not until 20 years later. Both unemployment and inflation went on to reach double digits in the following three years. October of ’78 was a tough month for the market, too, with the Dow falling 12% in 20 days.

Question 8: True – While there have been many crashes in October, at times the month has also marked the first step toward dramatic recoveries. A major bull market began in late October 1990 and saw a huge increase over the following decade.

Question 9: A – Taken down by mafia money laundering, at the time it was the biggest bank failure in history. On the same day, President Ford went on national television to unleash a long series of economic anti-inflation programs and gimmicks, including his WIN (“Whip Inflation Now”) buttons.

Question 10: True – Crazy as it seemed at the time (and still seems), the Dow was up 889 points that day as bargain hunting and short-covering dominated the news, with international markets helping out the rally.