Word: lynch
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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...
...summer Lynch was less nervous. In fact, he once again became a true believer in the bull. Reason: the healthier corporate profits he had been looking for had started to arrive. "Here I had this lurking fear that there were no longer any values in the stock market, and, lo and behold, what was starting to unfold was that earnings were coming back." Behind the rise were a determined cost-reduction campaign by American business and the long decline of the dollar, which encouraged U.S. exports and made imports less competitive. Says Lynch: "The popular opinion is that America...
...retrospect, Lynch kicks himself for not paying more attention to some ominous signs that were flashing in September. Despite the weak dollar, the trade deficit did not improve as hoped. The July figure, released in September, set a new record. Meanwhile, the prime rate that banks charge on commercial loans kept creeping up, from 7.5% in March to 9.25% in early October...
...Wednesday, Oct. 14, the stock market, shocked by disappointing trade figures, suffered its first big quake -- a record 95.46 drop in the Dow. That posed a dilemma for Lynch and his wife Carolyn, 41, a physical therapist. They had long been planning to leave on Oct. 15 for a trip to Ireland. "Should we do this?" they asked each other. But Lynch rarely took long vacations, and he was especially reluctant to cancel this one. Though his roots are as Irish as homespun Donegal tweed, he had never been to the home of his ancestors. Besides, could an avid golfer...
...couple toured the scenic mountains of West Ireland on Friday, Oct. 16, they stopped at Blarney Castle, where Lynch kissed the legendary stone. "All I could think of was the market," he recalls, "as I swung backward, head down, into space, holding onto a steel bar for dear life." He hoped that the stone would give him luck rather than eloquence. But when he called the office that night, he learned that the Dow had plunged another 108.36 points. Worse, Magellan customers besieged Fidelity's 1,500 telephone operators with orders to redeem shares. Net withdrawals on Friday amounted...