Word: crashing
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Dates: during 1980-1989
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America' s top money manager, Peter Lynch, takes a personal look at the missed signals and painful lessons of Wall Street' s Crash...
...many Americans who were hurt in the Crash of '87, few feel as let down as the millions who invested in stock mutual funds. Their money, after all, was in the hands of savvy professionals who, if they saw a disaster coming, would take the necessary precautions to ease the blow...
...began bailing out of Fidelity's 75 stock funds. Caught off guard with not enough cash on hand to meet the flood of redemptions, Fidelity was forced to sell shares heavily. On Oct. 19 alone, it sold nearly $1 billion worth of stock and thus helped to intensify the crash. Because Lynch is an aggressive fund manager who is usually light on conservative stocks, the Magellan Fund was especially hard hit by the collapse. An investment of $1,000 made on Sept. 30 is now worth...
Since the crash, Lynch has gone over the year's events in his mind many times. Interviewed in the relaxed surroundings of his seaside home on a promontory north of Boston, he admitted to having qualms as early as January, when the Dow Jones industrial average broke 2000 and stood more than 157% above its 1982 low point. What bothered him was that the market seemed to bear no relationship to the performance of the companies whose stocks were being traded. Corporate earnings for 1986 had been no larger than they were in 1982 and 1983, and yet stock prices...
Boarding the plane, Lynch felt "like a prizefighter who knows that in six hours he will walk into the ring." Despite his confidence that the market would bounce back, he was troubled by fears and doubts, just like every other investor, large or small, during the historic crash. He thought about his mother, who lived through 1929 and "always said you should never own stocks." He wondered, "Maybe this is the start of the real thing." Most of all, he thought of the people who had bet on him, though he had always told them up front that...