The Black Monday Stock Market Crash Prediction
While working as a stock analyst at Shearson Lehman, Elaine Garzarelli became known for “predicting” Black Monday, the stock market crash of 1987. More accurately, her financial analysis indicated that the market was overvalued, leading her to sell about 50% of the stocks in her fund while making other hedges against a crash. Black Monday came about a week later which led to Elaine being dubbed as someone who had “predicted” the crash.
Elaine expressed discomfort with being put on a pedestal with a crystal ball — “I felt awkward because I got so much attention. A few weeks after that I made a negative comment, and the market dropped 120 points that day. The Wall Street Journal wrote that I had moved the stock market, and I was very uncomfortable. My career was going very nicely until then, and it was too much attention. It was a lot of pressure.”
Garzarelli was a partner and managing director at several major brokerage firms until 1995 when she founded her own business, Garzarelli Research, Inc.. For eleven years she had been ranked as Wall Street’s top Quantitative Analyst in Institutional Investor magazine’s poll.