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07/28/2009

The Stock Market Doesn't Repeat Itself But It Does Ryhme

The short answer is kind of.  There is a saying on Wall Street that the market never repeats itself but it often rhymes.  While the media loves to preach the doom and gloom sermon when the market takes a plunge, Wall Street is no stranger to scams, plummets and reckless greed.  Join me for a stroll down memory lane:

·         2000 The internet bubble bursts.  Many people claim it is the end of college kids starting billion dollar corporations in their dorm room.  Of course a few years later we have YouTube, facebook and twitter.

·         1998 The hedge fund Long Term Capital Management collapses.  Treasury Secretary Robert Rubin calls it the worst financial crisis in 50 years (perhaps he was in a coma for 50 years?)  Many demand it should be the end of hedge funds.  What happened?  A roaring market and more hedge funds. 

·         1997 The Asian currency crisis sends a hammer stroke to the financial world.  One that lasts only two years.  Afterwards Asia explodes into an economic boom.

·         1987 On October 19th the stock market has its largest single day loss in history.  The well respected economist John Kenneth Galbraith worried we were headed to another Great Depression.  Many experts believe the crash was due to the freshly popular computerized trading, a form of trading that some argued should be illegal.  What happened?  The market quickly recovered and computerized trading became common place.

·         1970 In June the railroad conglomerate collapses creating at the time the largest bankruptcy in US history.  Years later we have quasi government run Amtrak and the private commercial shipping company Conrail.  Did the sky fall?  (Yes, yes I know Amtrak is always late but it still runs.)

·         1938 For those who think Madoff has never happened before check this out.  In 1938 NYSE Chairman Dick Whitney (known as the “White Knight” of Wall Street) is convicted in one of Wall Street’s most notorious scandals.  President Roosevelt himself, upon hearing the news cries out “Not Dick Whitney!” 

There are plenty of other dates in Wall Street’s history where experts and journalists have cried that the sky is falling.  But we are still here.  By the way, scams, plummets and reckless greed will all happen again.  And we’ll still be here. 

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