Portfolio insurance covered 50 billion dollars of stock by autumn 1987.

Evidence

During the mid 1980s, portfolio insurance became big business. By the autumn of 1987, the portfolio-insurance programs of LOR and its licensees covered $50 billion of stock (Mason et al. 1995, p. 786) with perhaps almost as much again covered by firms not affiliated with LOR (Voorhees 1988, p. 57). This success, however, began to cause Leland and Rubinstein to have misgivings. Although they had coined the term “portfolio insurance,” they had reservations about it, preferring the broader and more neutral phrase “dynamic asset allocation.” They knew that for all their technical innovations they had not freed themselves completely from the assumptions of a BlackScholes world. — Donald MacKenzie, An Engine, Not a Camera, 804

Categorization

• XREF: The dollar scale of portfolio insurance by 1987 directly sets up the crash of October 1987, connecting to the wider financialization/debacle literature (e.g., work on the 1987 crash as a performativity failure). — connects to: Portfolio insurance largely protected client floors even during the 1987 crash — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 841

Broader Connections

• Portfolio insurance largely protected client floors even during the 1987 crash #contradicts (0.85) — Donald MacKenzie, An Engine, Not a Camera, 841