One of the questions that often emerge regards whether this stock market crash could have been prevented. In reference to Arbel, Carvell and Postnieks (1988), there is evidence that points to the fact that despite the existence of signs that the risks on the financial markets were increasing rapidly due to the slowing United States economy and the persistent inflation, which created a scenario where companies gained significantly higher valuations than their actual value, different market players ignored such warning signs. The confidence of different market players was further enhanced by the fact that computerised trading systems were fast taking shape on the stock market, and it was believed that they could not fail. In this case, the market players assumed that with such systems in place, there was no need to intervene on different market warnings since these systems were expected to intervene on their behalf. However, Solomon and Dicker (1988) point out that these trading programs had not been tested to establish how they would respond in the market in the event of a crash had never been tested. Therefore, with a higher level of trust in these trading programs and their capability to avert any losses in the event of market volatility, different market players took higher risks that endangered the actual market. speaking from this point of view, there is a need to observe that up to this day, the trading programs are largely blamed for the Wall Street Crash of 1987, while human beings who engaged in high risk trading behaviour as well as ignored some of the warning signs that could have helped prevent the crash or lessen its impact in case it happened are often perceived as not the cause of this stock market crash.
There are a number of critical lessons that emerge from the 1987 Wall Street Crash. To begin with, there is a need for human beings to take an active role in monitoring different elements in order to detect warning signs of problems that are likely to occur in future. In this case, despite the economic warnings, financial trading firms were unwilling to take a cautious approach to the market, thus increasing the risks of a greater impact in case the market crashed. Similarly, there is a need to observe that whereas a particular system may be effective and infallible, such a system needs constant monitoring and evaluation to ensure that it does not cause unforeseen problems in future. For example, suppose the trading managers had failed to put their full trust in the trading system, they would have reduced the trading risks they engaged in. Lastly, there is a need to thoroughly test a system from different perspectives and against different conditions before declaring it infallible. For instance, if the creators of the trading programs had tested these programs in different conditions including cases where the market places thousands of orders simultaneous, they would have established how such a system behaves in case of a market failure and as such, establish ways to ensure the programs does not worsen the situation.