Word: stockely
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...seen this movie before, and it's not a happy one. Japan's financial sector imploded in the 1990s as bubbles in real estate and stock prices (sound familiar?) burst. Eventually, Japan's central bank drove interest rates to near zero to stimulate the economy. But it was, as the economists say, "pushing on a string." Banks were reluctant to lend because they needed to hoard capital to repair their balance sheets - just as they need to do now in the U.S. Economic growth slowed, and demand for the credit that was available diminished. The result was Japan's infamous...
Benjamin Graham was well prepared for the Crash of 1929. The now legendary investor had hedged his bets: he would buy preferred stock in a company and sell short common stock in the same company. When stocks crashed in October 1929, common shares fell much faster than preferreds, and Graham made a lot of money off short sales...
...Graham couldn't bear to part with them, he wrote in his memoirs. They kept falling, and his profit soon turned to a loss. His fund (equivalent to a modern hedge fund) ended the year down 20%. In 1930 it dropped 50.5%; in 1931 16%; in 1932 3%. "The stock market," as Graham resignedly put it in the first edition of his book with David Dodd, Security Analysis (1934), "is a voting machine rather than weighing machine...
...important lesson to remember these days. Stock prices have dropped a lot, so stocks look a whole lot cheaper than they were just a couple of months ago. By some - but certainly not all - measures they even look cheap in historical terms. But that's no guarantee prices won't keep dropping...
Apparently, this aphorism applies even when the absent party is an abstruse and foreboding series of numbers that once leered over your meal options. Somehow, old friends who once had nothing but vitriol for the quasi-meaningless card stock feel lost without them, which is a problem in itself...