Today is the anniversary of the great 1987 crash. We last looked at this a few years ago, via my friend Rob Fraim.
Today, on the 19th anniversary of
the 1987 stock market crash, he put out his recollections from that
day.I found them so interesting that I suggested Rob (who is
blogless) post them here. He gladly agreed. Without further adieu, here
is Rob’s version of 1987 Crash Revisited
October 19 – the day that each year gives old-timers in this business a renewed facial tic and post-trauma flashbacks.
“What?” you say. “You mean you were actually there, Grandpa? You remember the Crash of ’87?”
Yes, I was, and yes I do. Confirming rumors that I am, in fact,
older than dirt I note that I was in this business in 1987 – and had
been for a few years prior (I started in 1983.)
I was having dinner last week with a friend who runs a hedge fund
(another graybeard, although he looks younger than me) and we ended up
talking about 1987. He had a great story about the whole thing (which
I’ll let him tell you about someday if you ever get to have dinner with
him.)
The story continues here . . .
News of the World #9
Elsewhere US CPI Data Commentary Bloggers Take: Inflation (CPI, PPI), The Big Picture. It quotes a different community of econ. bloggers. So you get a chance to hear from new people. CPI: Not Much Progress, David Altig, check how his link…
I remember sitting at my desk (Lehman Brothers, San Francsico) looking at my Quotron (along with an entire office of brokers) watching with horror as what seemed an hourly loss of 100 Dow points. We were quite frozen with fear and wonderment.
Stocks like Coke, Gillette, Disney etc. ripped to shreds. All the big and best names. The end of free markets? Certainly the end of the stock market as we had known it. Was a 1929 comparison accurate? Did it even have a place.
And, I heard the rumor in the office of either a client or broker who had a ton of S&P puts, way out of the money at the time he had purchased the, that had suddenly made him a fortune.
A floor broker on the PSE took a picture of his monitor on the close and gave it to me buddy 10 years later on his 40th birthday.
What may have been forgotten was that the DOW had it’s two biggest days ever, to that point, the following two days after the 507 point crash………….
’87 vs the Tech Wreck? I would rather have lived through the ’87 crash then the Chinese water torture that was the Naz going from 5100 to what 1100 or so? 80% of value GONE in 18 months. Lots and lots of folks won’t EVER recover from that in their lifetimes. Remember, not just little piddly companies were destroyed. Intel, Cisco, EMC, MSFT and others lost 75% of their value. NAZ may NEVER again hit 5000…..
Here’s what I can tell you: it happened all at once, 23% in one day! No chance to take cover. Few were ready. However, at our firm, Elaine Garzarelli, chief sector anayst, became 92% bearish just a month or so earlier.
And, since it was a market problem (of valuations), all of the stocks came roaring back. But, that one day, it felt sick and awful.
Those making the decision to go right back into stocks were eventually rewarded. So, in that respect, with Nortel and JDSU @ 2 you have a good point.
For all of us in San Francisco, October 17th, 1989 was another sudden crash at 5:02 PM: 7.0 Earhquake
Didn’t Joe Granville get alot of press for calling the ’87 crash?
Jeff Saut said in one of his summaries over the past couple of weeks that Granville recently advised people to go to 100% cash.
Larry, I still remember the earthquake and seeing Al Michaels and his team members careening in their chairs. I remember watching the stunning, horrific scenes of the fires. The 1987 crash meant nothing to me. I was not long out of school and scratching out a living and trying to build a home (yes, we were physically building it ourselves) with a 14.5% interest rate on my construction loan in 1984 and 1985. I financed quite a bit on my credit card when interest was still tax deductible. My husband (commercial electrician) was unemployed for almost 14 months at that time. So in 1987 we had built no investment portfolio to lose. We do have a beautiful home. Now, for 2000….. My portfolio never recovered from 2000–and I was in mutual funds–and nothing terribly sexy.
I Googled Granville and lo and behold look what I found:
http://bigpicture.typepad.com/comments/2005/02/granville_predi.html
I guess that tells us all we need to know about old man Granville.
Very interesting to read some of the predictions from this site back last year…..
Man, thats some Google score ya got there . . .
Does anyone else get the impression that some people(BR not included) are beating off to this stuff. It’s like they can’t wait for the impending portfolio annihilation that is supposedly about to happen just around the next corner. All the while they sit in cash; the opportunity cost since July must be driving the bears crazy!
JDamon, I lived through both, but didn’t really have anything at stake in 1987 (was still paying off student loans…).
The tech wreck was not mere Chinese water torture, the Nasdaq went from 4958 on March 27, 2000, to 3321 on April 14, 2000. Roughly 33% drop in not much more than 2 weeks. That was giving me a very large tummy ache at the time (being very diversified in software, hardware, and dot coms….. ugh).
Then we had that huge head fake thing where it got back up over 4200 in August of 2000, and my CSCO was in the 80s and my SUNW was in the 60s…..
Of course, dropping over 3000 points from there to 1100 in September of 2002 was no picnic…….And the tummy ache got a lot bigger, because I was a moron.
The thing I remember most was that there was this one fellow I knew who’d ridiculed my cautiousness for some time prior to that big day.
Let me just say I was very, very lucky that day. In fact, it was a very good personal day for me… but purely by luck my friends…. purely by luck.
He wasn’t being mean-spirited, but he had an attitude of being impervious to risk. He had a ring in his nose and his persona was leading him around like a stud bull on a rope. There was nothing that he couldn’t spin into a reason to be bullish. He questioned my patriotism… my good sense… and my motivations.
I’ll tell you it was a lot like when BR does the sit-n-spins on CNBC and the tone against his point of view begins to take on almost a personal edge.
It’s always been hard for me to understand how a rational intellectual discussion of tangible elements can descend into a personal attack. I’ll never understand it.
A bridge has no feelings… no animosity. It doesn’t ridicule… it doesn’t remember, and it doesn’t keep score. It only knows it’s a bridge, and it must laugh at our silly ponderings about what it is.
Anyway, my fellow sat in his car pulled just half way out of a parking space that afternoon, dazed, with his engine running and his window down. I don’t know why he stopped that way, but it must have seemed the thing to do at the time, so he did.
I watched him for a few minutes outside the window while he just sat there without moving. There were no other cars urging him to move yet and he just stayed there… transfixed with a quiet dull stare aimed straight ahead.
After a few minutes another car needed him to move and tooted its horn. He sat another moment until the toot repeated, and then he slowly pulled away.
24 November 2006 completes a long term X/2.5X/2.5X fractal saturation point for the Wilshire:159/398/398 days. A percentage wise crash equivalent to or greater than the 1987 crash will validate simple saturation curve fractal analysis of the macroeconomy as a real science and show the completely mechanistic nature of the complex money-debt-wage-asset system.
BTW, I own two homes, so I certainly don’t want to see my property value get wrecked.
On the other hand, I’d love to trade up, so some of the higher end home prices come in, I won’t complain too loudly.
Gary, I think that you’ve given words to Einstein’s postulated Unified Field Theory. Kudo’s.
In 1987 I was too busy setting myself up to lose a fortune in real estate to even be bothered by the market.