An awful dawn broke over the Manhattan skyline on December 4, 1984. Ronald Reagan was deep into what would become his first term and the markets had yet to respond to The Gipper’s cheery tone.
To make matters worse, a cloud of noxious fumes had descended over the squalid town of Bhopal, India. The toxic mist had come from the nearby Union Carbide plant. And, as the death toll passed three thousand (with just as many injured) the news sent the Dow Jones Industrials into a tailspin.
I was on the exchange floor, having turned a series of summer jobs into a vocation. My natural inclination with numbers combined with a proclivity for gambling made Wall St. a natural destination.
Just then, a grizzled, somewhat shabby trader nearby cast his eyes towards the Big Board and with outstretched arms exclaimed, “How low can it possibly go?” It was at that precise moment that I learned what a market low looked like.
Of course I learned at the foot of one the true masters of the game. A man whose wisdom was, and is, only surpassed by generosity and kindness. As a young pup he had told me, “Look for the herd. When you find out which way it’s moving, get out of the way and do the opposite.”
Easier said than done, but truer words were never spoken.
Let’s face facts. The markets went into the potty last summer and have yet to recover. Opinions are still mixed, and most people don’t know what to do. That in itself should tell you there still room on the downside.
When will it all end? Understand this, no one, not even The President, has a clue. What should you look for? How will you know?
I suppose we’ll all know the market’s have hit bottom when the great minds in newsrooms across this land tell us that the stock market is finished and that shares of corporate America no longer represent the greatest path to shared prosperity.
When Brian Williams, and the editorial staff of The New York Times tell us the stock market is dead; when your friends and neighbors darkly confess that they’ve sold their last shares; then, and only then, will you know that the markets have hit bottom.
By the way…. They won’t ring a bell and I’ll already be long.
