CNBC's Jim Cramer explained that the crash in 1987 was caused by market mechanical malfunctions, not the economy itself.
"Sometimes crashes have nothing to do with the economy," Cramer said. "They're caused by the mechanics of the market."said he thinks investors not only need to know what to do in case of a market crash or enormous sell-off, but why the crisis might be occurring.
But Cramer noted a difference between the two, saying the crash in 1987 wasn't caused by an overarching failure of the economy. He recounted 1987's "Black Monday" and "Terrible Tuesday," where the Dow lost more than 22% of its value in a single sessionYet, there was a rally over the next few days, Cramer said, due to Alan Greenspan, the Federal Reserve chair at the time, who managed to raise enough liquidity from the central bank to stabilize the market. But during the financial crisis, the market took years to recover, not bottoming until 2009 after the Dow initially plunged in 2007.
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