Word: crash
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Dates: during 1980-1989
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Even October's stock-market crash and the cloudy economic outlook have so far failed to dampen the industry's robust bookings, which reached $5 billion in 1987. One reason is that travelers no longer view cruises as an extravagant expense. Because many passenger lines are trying to lure more first-time, middle-class customers, prices have moderated in comparison with other types of vacations. Besides the traditional luxury cruises that cost a daunting $400 to $600 a day, many lines offer so-called contemporary excursions that run about $140 to $220 (including meals and activities...
...Fortunately, the worst was over. The market kept gyrating during the next few weeks, but there were no more crashes. Lately, the inflow of new investments has started to outpace redemptions, and Lynch is pleased that only 50,000 out of the 1 million-plus Magellan customers have abandoned the fund completely. Even after the crash, Magellan investors are 2% ahead for 1987 as a whole. According to an independent study by Lipper Analytical Services, investors who have been in Magellan for three years have earned 68% on their money as of the end of November. Over the same period...
Lynch's peers in the money-management business think that he came through the crash remarkably well, considering the enormous size of the fund he had to handle. Says Barton Biggs, a global strategist for Morgan Stanley: "Lynch is still the most consistent mutual-fund manager in the country, even if he does not outperform the market every time. None of us are supermen in a prolonged bear market." Agrees Anthony Thatcher, a portfolio manager at Scudder Stevens & Clark: "Lynch's reputation, though somewhat tarnished, is not obliterated...
Sobered by the crash, Lynch is wary about what will happen to the market. He does not foresee a recession yet, but is fearful of the plunging dollar. "If the dollar declines from here," he says, "it will probably accelerate our inflation and persuade the Europeans and Japanese to stay out of the U.S. stock market." Lynch also frets that the market is at the mercy of sophisticated, new computerized trading techniques that sometimes run out of control. Says he: "Program trading, portfolio insurance, stock options and index trading accelerated the crash. Without them, instead of an 508-point decline...
Lynch remains convinced that America is returning to competitive shape. To abandon the stock market now would be to lose faith in those bustling factories, offices and stores he inspects every week. He believed in the long- term value of U.S. companies before the crash. He still does...