Theos-Talk Archives (July 2002 Message tt00064)

ramadoss@gbronline.com wrote:
> On the Sunday before the stockmaket fell in 1986, the famous 
> Economist, J K Galbraith was on a talk show. When asked about 
> the what is going on in the economy, he told an interesting story 
> even though I do not think he had any inkling of the impending stock 
> market fall.
> 
> He stated that shuffling papers do not create wealth and then 
> spoke of an incident. He took a cab from JFK to Manhattan and he 
> asked the cab driver how his business was going. He said that he used 
> to have a lot of business from the stock brokers in the Wall Street 
> and his business currently was tough as the stock brokers are now 
> driving the cabs!

I, and a lot of people, made a nice chunk of money over the 1987 crash.
It was an artificial dip, caused by too many people (especially large
not-for-profits) using the relatively new and not perfected method of
programmed trades. Essentially, automatic sell orders were given for
stocks when they went below a certain point. A normal dip caused
computers to "panic sell", creating the crash (the bond market, on the
same day, was at a major high point). It was no secret what happened,
and those with cool heads bought up a bunch of undervalued stock the
next day, and made out quite well. I was not quite confident enough to
buy on margin, but those who did made major profits.

Bart Lidofsky