Suddenly the stock market seems to have everyone's attention. Yesterday's 500 point loss was certainly dramatic, but represented less than 5% of the NYSE value, and it's what comes next that has really analysts worried. Suddenly everyone knows what AIG stands for.
The current brouhaha brought back my memories of a really impressive melt-down, that of October 19, 1987. On that Monday, the NYSE plunged 22% -to equal that, todays market would have to lose 2,400 points in a single day. Ouch.
I can remember exactly where I was on Monday, October 19th, 1987- I was on a train to Chicago, where I was going to attend a big book auction on Tuesday. I've never been crazy about flying, so Sunday evening I got on an Amtrak train and headed from Boston to the Windy City, planning to arrive sometime after lunch on Monday and go over to the day-before-auction preview.
Back in Ye Olden Dayes, of course, we didn't have cellphones or WiFi or anything, so when you were on a cross-country train you were essentially cut off from all news of the outside world. When I rolled into Chicago around 1 pm I hadn't heard a word of news all day.
I grabbed a taxi for a ride to the auction house, and got a chatty driver. This was one of the big-city fancy-schmancy auction houses, so I'd put on a tie, and was carrying a briefcase which had my jammies & toothbrush in it, so I probably looked like a disheveled bond trader or something. The driver immediately started making cryptic remarks about "what a crisis, huh?" and "ever seen anything like this before?".
In situations like that I have this odd reflex reaction of trying not to look stupid and playing for time until I can figure out what the Hell is going on, so I made a few non-committal remarks, and we were suddenly at the auction gallery.
I got out of the cab with the odd sensation that the world was ending, and everyone knew it but me.
Big city fancy-schmancy auction houses are not the sorts of places you go up to someone and ask "pardon me, but have you heard a newscast lately?", so I got my catalog and started previewing. All round me the gallery front-office staff, which at places like this is mainly composed of attractive, well-bred young women trolling for well-off art-collecting husbands, had a hushed feeling of dread. They were whispering things to each other like, "my fiance sold all his positions this morning but we got wiped out anyway," and "well, my boyfriend works at the Board of Trade, and he says this could be the end of it ALL".
hehehehehe... I thought- I got to get me to a radio...
...and I eventually found one, playing softly in one corner of the gallery. The newscasters were using comforting phrases like "the worst disaster since the 'Crash of '29".
At times like that I am thankful that my business of buying and selling century-old books lends me a certain long-term perspective on such things. Well, the books and a few stiff scotch-and-waters did, anyway. And the good news was that on Tuesday everyone was completely spooked and I got some good buys at the auction.
And, of course, the markets went back up eventually. So a 500 point drop, or even a 1,000 point drop isn't something to worry about. It's that AIG thing that has me hoarding canned goods and being thankful we have 4 acres of cuttable firewood out back.
And I'm staying off trains.