Word: stockings
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Dates: during 1980-1989
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...savvy fund managers actually came out ahead. The Oppenheimer Ninety- Ten fund rose nearly 8% in the last two weeks of October, largely because it invested in put options, which appreciate when stock prices drop. When the market started to recover, many fund managers began to scoop up bargains. Neff's Windsor Fund, for example, bought $800 million worth of stocks. "When everyone is panicking and stock values are depressed, of such circumstances are opportunities born," he says. "We are buying aggressively, and we will continue...
...most mutual-fund companies could not take full advantage of those opportunities. Many exhausted their cash reserves and had to sell stocks or borrow from banks to meet redemptions. Even so, no companies were mortally wounded. Diversification helped large firms like Fidelity, which has 4.7 million accounts in more than 100 different funds. Some 98% of the customers who cashed in shares of Fidelity stock funds merely transferred the money into the company's other funds, including money-market accounts...
Over the long term, however, such switching could hurt the profitability of the fund companies, since money-market and bond funds bring in lower sales commissions and management fees than stock funds do. Most fund managers hope that investors, after a period of cooling their nerves, will venture back into the stock funds. Says Edward McVey, senior vice president at Franklin Resources: "As soon as people got over the initial trauma of Black Monday, they were calling up to reverse their redemptions." Michael Lipper, president of Lipper Analytical Securities, is not quite so confident. "The panic is over," he says...
...first the strategy was purely a matter of debate and speculation. It was the question of the decade. What would the Government do to prevent Black Monday from turning into Bleak '88? Now, less than a month after the stock- market crash, the Reagan Administration's plan has emerged in sharp relief. The main objective: avoid a 1988 recession at almost any cost. That means encouraging the Federal Reserve to pour money into the economy and reduce interest rates. But in doing so, the Administration has had to make a sacrifice, the U.S. dollar. Treasury Secretary James Baker, the chief...
...even tougher than Volcker's was. The new chairman must fend off a recession by keeping interest rates low, but he will come under excruciating pressure to raise them again if the dollar needs rescuing. Any little upward nudge in interest rates, however, is likely to send the stock market into the tank again. When the Fed's open market committee met last week for the first time since the crash, some economists hoped the group might rescind September's discount-rate increase. But no such announcement came. One reason may be that the committee has too little information...