As we hit the 30th anniversary of 1987’s Black Monday crash, Citywire spoke to leading lights who were active at the time to hear how they weathered the literal and figurative storm.
Here veteran bond investor and Citywire A-rated manager Dan Fuss gives a Stateside view of that fateful October day.
People ask me about 1907 too but I wasn't active in the markets then. I do remember 1987 both on the bond and the stock side.
I remember that Monday in the fall very well. I was at a client meeting where I managed a large bond portfolio and we had built up a large position in long US treasuries and that was in short-term peril.
I was at a board meeting. They said: ‘You're a credit man we are looking at the portfolio and asking what are all these long treasuries doing here?’
I said they are cheap and they said: ‘Of course they are! You're being pounded.’ I said they are offering more and more yield; at any rate I weathered it.
As I was going out of the meeting one of the staff members asked me to come over and look at his Quotron, which tells you how long ago it was. Long treasuries were going straight up and what I didn't know was that the stock market was going straight down.
So I walked back to the office, not even a mile, and I went into the office all rosy, thinking: ‘Boy what a great market.’ The president of the firm, who is a stock portfolio manager, and all these people are gathered around the Quotron, they all looked like they had to go to the IRS for a review or something.
The president got mad at me when I said bonds were up, he said the stock market was down. I went to the bathroom to punch the air and change my demeanour. That afternoon we started buying a bunch of converts.
A very different time would be 1973-74.That one gives me the shivers because everything looked ok, 1973 had a normal market correction.
But, it was magnified, as we had a growth stock phenomenon that gradually came apart in the middle in 1973, but the average stock had gone down long before that. Then you had a recovery, but the market didn't feel right.
As you went over the end of 73 into 74, not only did the market not feel right, Congress stopped functioning for the first time in anybody's memory. Congress were sitting on their hands they weren't agreeing with anything. Everybody got very cautious.
The presidency was under attack because of Watergate. The markets started to slide, the Fed took notice, but they certainly weren't going to do anything that was going to rattle things and then started supportive talk.
The market kept sliding. Watergate was all over the front page by that time and the president, unlike Trump, had been very popular. Nixon was getting us out of Vietnam, which was so unpopular in the US.
Stocks and treasury bonds were going down, despite monthly inflows from the corporate defined benefit plan. Finally Nixon resigns and he is replaced by the recently-appointed vice president, but the market kept going down and then it got worse.
Interview by Dalvinder Kular.