Word: dows
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Dates: during 1990-1999
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Even with the Dow Jones Industrial Average flying high over 8000, few on Wall Street say they expect a crash anytime soon. Indeed, the world is a prosperous, friendly place these days, and the coffee-shop buzz is, "How do I get in the market?" not "How do I get out?" But make no mistake, the stock market could crash again. Mechanically, there is nothing in place to guarantee that the Dow won't fall 1000 points by lunch and another 800 points in the afternoon. Get real! An 1,800-point decline today would be the same 23% drop...
...N.Y.S.E. has adopted a flight of funny-named trading curbs: "collars" prevent certain computerized stock trading when the Dow is up or down 50 points in a day; the "sidecar" rule gives small orders priority when the market is moving briskly; and "circuit breakers" halt trading for 30 minutes when the Dow is down 350 points and for one hour when it is down 550 points. The curbs ensure that investors have time to think. But at the end of the day, if what they think is that they should sell, their brokers, the fund companies and the exchanges...
What could cause a stock market crash? it's an intriguing question with no real answer, other than some kind of surprise. My bet is that it would take a whopper. The bull market is so strong that to send the Dow careening would take something truly out of this world. Here's how it might unfold...
...market opens; inflation-wary traders send the Dow plunging 160 points as interest rates soar...
...Yardeni at Deutsche Morgan Grenfell and other economists hit the wires saying that rising wages will not lead to inflation in this new era. Institutions, recalling that folks like Roach have been yelling "fire!" for more than a year, start buying. The Dow recovers...