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Financial Panics

Asset Bubbles

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

( Symbol Guide )

 [ A ]

A Corporate Crime Wave? Or A Search For Political Scapegoats?, George Gilder, The Wall Street Journal (Opinion Piece), January 11, 2002.  "Crime may have declined in the streets but, by the recent inflammation of the pundits, you would think there has been an outbreak of corporate criminality. The Internet, communications and stock-market booms of the 1990s, it seems, were based on a pervasive series of felonious acts. A wide array of businesses, from Global Crossing to Loral, from General Electric to Enron, artfully inflated the worth of their shares through the creation of Potemkin businesses."  (Market History)

A Spanking for the Trial Lawyers, Walter Olson, The Wall Street Journal, May 23, 2003.  "One hundred and forty-five billion dollars! It was the biggest punitive damage award in U.S. history -- and it resulted from a "fundamentally unfair" trial in which plaintiffs' lawyers "succeeded in inflaming the jury's passions," most notably through "egregious" appeals to racial sentiment, to the point that its members "ran amuck." That's what a unanimous state appeals court said on Wednesday when it struck down the award -- $145 billion! -- against the tobacco industry purportedly on behalf of all sick smokers in the state of Florida."    (Market History)

After the Bubble, Jonathan R. Laing, Barron's, June 29, 2002.  "Jim Paulsen recalls the moment as part epiphany and part shock.  It was in April when he realized that more time had elapsed without a new stock-market high than the 484 trading days it had taken the market to claw its way back from the 1987 crash. The realization only reinforced the view of the economist and chief investment officer of Wells Capital Management that something was drastically wrong with the powerful post-1982 bull market, which up until recently seemed to overcome all manner of obstacles in its upward ascent, from the "jobless recovery" of the early-'Nineties recession to the Russian ruble and Long-Term Capital Management crisis in the fall of 1998."  (Market History)

Appreciation In Capital, Thomas G. Donlan, Barron's, January 1, 2002.  "Presidents and congressmen must marvel at how appropriate it is that deficits are written in red ink and surpluses in black ink. For in fiscal politics, surpluses and deficits both present chancy propositions, filled with peril as powerful as the rush of adrenaline that hits a gambler when he puts the rent money on the roulette table."  (Market History)

Are Collectibles the New Real Estate?, Alan Krueger, The New York Times, June 23, 2005.  “Everyday it seems that another collectible is sold for a record price. Consider three widely publicized sales in the last month. Babe Ruth's contract, which sent him from the Red Sox to the Yankees in 1919, went for nearly $1 million. A 1913 Liberty Head nickel went for $4.15 million, up from $3 million a year earlier. And a 1918 upside-down biplane stamp sold for $525,000, more than three times its pre-auction estimated price.  Are collectibles a sound financial investment? If the past is any guide, the answer is no. Historically, collectibles have yielded a much lower return than stocks and carried more risk." (Market History)

As Europe Cuts Corporate Tax, Pressure Rises on U.S. to Follow, Glenn R. Simpson, The Wall Street Journal, January 28, 2005.  “European countries have been steadily slashing corporate-tax rates as they vie for foreign investment, potentially adding to pressure on the U.S. for similar cuts as it weighs a tax overhaul.  Following the lead of Ireland, which dropped its rates to 12.5% from 24% between 2000 and 2003, one nation after another has moved toward lower corporate rates with fewer loopholes. The Netherlands, the second most popular European target for U.S. investment, recently joined the movement, lowering its corporate rates by three percentage points to 31.5% and simplifying its tax structure.”  (Market History)

As Funds Leverage Up, Fears of Reckoning Rise, Randall Smith and Susan Pulliam, The Wall Street Journal, April 30, 2007.  “Hedge-fund manager John Paulson made $1 billion using a complex financial instrument to pump up a bet that the subprime-mortgage market would crater. The parent company of retail giant Sears made $74 million using a similar device to boost its wager that a basket of stocks would rise in value.  Both were playing with leverage -- the magical power that allows investors to make big investments without putting big money on the table. These days, they have lots of company. Thanks to advances in financial engineering, investors have never had so many different ways to make commitments that exceed their bankrolls. And never before has leverage wormed its way into so many nooks of the financial world.”  (Market History (Leverage))  Seminar

At Bell Labs, Hard Times Take Toll on Pure Research:  Under Weakened Lucent, Famed Haven For Theorists Gets a More Practical Bent, Dennis K. Berman, The Wall Street Journal, May 23, 2003.   "In November, Lucent Technologies Inc., parent of the renowned facility, scuttled the speech-research department. The move comes as part of a $2.1 billion cost-saving and reorganization program at Lucent. These cuts, combined with five large business divestitures, have shrunk the labs' pure-research staff to just over a third of its 1996 level, and narrowed the labs' focus to projects directly related to telecommunications products."  (Market History)

 [ B ]

Banks on a Bridge Too Far?, Robin Sidel, Valerie Bauerlein and Carrick Mollenkamp, The Wall Street Journal, June 28, 2007.  “The nation's largest financial institutions have spent the past year relying on robust capital markets to offset woes in their retail-banking operations. Now, that big revenue stream may be starting to dry up.  A sudden retrenchment in debt markets is likely to nip at profits at the big banks that have been financing the leveraged-buyout boom around the globe. The latest deal bonanza, in which private-equity firms buy public companies and load them up with debt, has created several new financing techniques that mint money for the banks, but can also leave them holding more risk.”  (Market History | Macroeconomics (Credit History)) Classic

Bear's Pause:  The Rally Is Just A Phase Of A Long-Term Down Market, Researcher Says, Sandra Ward, Barron's, June 16, 2003.  "Armed with rich databases of economic and market information, along with any number of proprietary indicators, Davis and his team at Ned Davis Research in Venice, Fla., are able to pinpoint trends and patterns that are scarily reliable in assessing where the market is headed. The penetrating analysis and prescient prognostications are the reasons that Ned Davis Research, founded in 1980, counts 851 paid-up subscribers in 32 countries and has 4,962 people on its mailing list. He graciously took our call recently and offered his thoughts on why this rally is for real, and why the continuing bear market is also."  (Market History)

Bubble: The Roots of the 90's Boom and Bust, The Washington Post, October 2002.  "Mention the Bubble Economy and, for many Americans, it now conjures up images of shredded documents and half-built Houston mansions, depleted pension accounts and executives being led off in handcuffs. But it didn't start out that way.  Roughly from 1995 through the end of 2000, the Bubble Economy was known as the new economy, and nearly everyone thought it was a marvelous thing."  (Market History)  Classic

Bursting the (Latest) Bubble, Ian MacDonald, The Wall Street Journal, January 14, 2004.  “Clifford Asness, an investment researcher and managing principal at a New York hedge fund, would like to burst your bubble. Literally.  His thesis: Stocks are troublingly expensive today. So investors should either expect muted gains over the next decade or another boom-bust cycle, where shaky stock prices rattle investors but make little progress -- like the past five years. In his bleakest scenario, U.S. stocks could actually lose to bonds over a 20-year stretch for the first time in history.”  (Market History)  Classic

 [ C ]

Capitalism and Its Troubles, The Economist, May 16, 2002. "The capitalist system has proved surprisingly robust in the face of recent crises, but if it is to keep delivering the goods it needs an overhaul, says Matthew Bishop."  (Market History)

Classy Monitor: A Longtime Securities Analyst and Respected Mentor Cites the Importance of Geopolitics, Sandra Ward, Barron’s, January 6, 2003.  “Barron's: At what point in the market cycle are we?  Moltz: We are at a stage where the financial bubble has been washed out and the market's trying to rebuild. That's going to take time. This has been a pretty significant cleansing process, both in terms of size and duration. It's about as long and as big as we've had in the post-World War II period. In the last downturn of this magnitude, 1973-74, it took five years or so before the market got back to prior peak levels. Although earnings rose from the lows in 1975, it took until 1980 for the Standard & Poor's 500 to surpass the previous high it set in 1973. It took until almost 1982 before the Dow Jones Industrial Average hit its prior high. That's quite possible this time, too.”  (Market History)

Comparative Advantage: Five Ways Stock-Market Values Come Out Ahead, Gary C. Byrne, Barron’s, January 6, 2003.  “Under attack by an army of pessimists, the stock market has stumbled and lately rebounded. The tactical question now is whether the rebound is temporary -- a bear-market rally -- or the first leg of a new bull market. The strategic question is whether stocks are selling for attractive values. As with all questions of value, we must ask, "Compared to what?" Here are some answers.”  (Market History)

Cooked Books:  Shoddy And In Some Cases Sharp Practices By The Big Six Accounting Firms Are The Hidden Element Linking The Financial Scandals Of The 1980s And 1990s, William Sternberg, The Atlantic Online, January 1992.  "There's an old joke in the accounting profession about a businessman who wanted to hire an auditor. He set up interviews with represent atives of several leading CPA firms. "How much is two plus two?" the businessman asked each applicant. The first three applicants gave the correct answer and were promptly dismissed. The fourth applicant, who got the engagement, pondered the question and then replied, "How much do you want it to be?"   (Market History (Savings and Loans))

 [ D ]

Did Washington Set the Stage For Current Business Turmoil?, Jacob M. Schlesinger, The Wall Street Journal, October 17, 2002.  “Blame for business's recent troubles has been assigned to everyone from greedy executives to naive investors. But there were singular moments when Washington also made decisions with serious consequences. Here are five:"  (Market History)

Ding Dong! The Wicked Bear Is Dead!, Mark Hulbert, CBS MarketWatch, July 22, 2005.  “Assume for the moment that you had the bad luck to invest a lump sum in the stock market at the absolute worst possible time - the March 2000 top.  Would you by now have recovered all of your bear market losses and then some, and thus be sitting with a profit?  Or would you still be in the red?  You'd think that answering these questions would be relatively straightforward, at least for the average investor."  (Market History) Seminar

Dow 36,000, James K. Glassman and Kevin A. Hassett, The Atlantic Monthly, September 1999  "Has the long-running bull market been a contemporary version of tulip mania? In explaining their new theory of stock valuation, the authors argue that in fact stock prices are much too low and are destined to rise dramatically in the coming years." (Market History) Seminar

Dullsville, U.S.A., Michael Santoli, Barron’s, July 19, 2004.  “Stock indexes have been locked in a tight trading range all year, frustrating bulls and bears alike and generating suspense about the market's next big move. The benchmark Standard & Poor's 500 index has shed just a handful of points since the start of the year, and has spent all of 2004 hemmed between 1076 and 1163, a range of just 8% from low to high. This stretch of 128 trading days spent in a range of 8% or less ranks among the longest in recent market history.  The market has hit a lull of at least 80 days' duration about once every two years since 1979. But only three times has such a tight range persisted for longer than this year's. If history is any guide, stocks are likely to break out above or below the current boundaries within a matter of months.”  (Market History)

 [ E ]

11% Solution, Adams Barth, Barron’s, July 6, 2005.  “Every Business day. Investors are bombarded with new economic data, macro and micro, all of which supposedly affect the value of U.S. stocks. While some investors may dismiss macroeconomic information such as quarterly gross domestic product, initial jobless claims and factory orders as irrelevant in the making of portfolio decisions, few probably would file this year's and next year's earnings estimates for the Dow Industrials or Standard & Poor's 500 under a "More Useless Information" heading.  But that's what they ought to do: Insights about individual firms are valuable; fixation on broad measures of current or future earnings isn't. Not because predicting corporate earnings is an impossible task, but because future long-term macro-earnings can be predicted with almost complete precision."  (Market History)

 [ F ]

False Hopes for the Economy -- And False Fears, Edmund S. Phelps, The Wall Street Journal (Opinion), May 28, 2003.  "The towering investment boom of 1996-2000, now over, was a huge lift -- and not just for wages, profits and employment. There may never been a time in U.S. history when innovative activity was more engaging and working life more rewarding. The task now is not to create artificially a replacement boom by assorted stimulants, which would be hard at best to do anyway. It is to maintain and improve the vitality and creativity of the economy so that high performance is the norm rather than the exception."  (Market History (Innovation and Productivity)

Fed Defends Stock ‘Bubble’ Performance: Greenspan Attempts to Restore His Image, Steve Pearlstein, The Washington Post, December 22, 2002.  “Responding to criticism that it helped create and sustain the stock market "bubble" of the late 1990s, the Federal Reserve Board has recently launched a vigorous defense, arguing that it was better to have boomed and busted than never to have boomed at all. The campaign represents a determined effort by Fed Chairman Alan Greenspan to restore the luster to his reputation as the maestro of global economic policy that has recently been tarnished by the worst stock market crash in 30 years and an economic slowdown that has still not run its course.”  (Market History)

Federal Monetary Policy, 1800-1900, Some Tables of Historical U.S. Currency and Monetary Aggregates Data, Richard G. Anderson, 2003.  "Many of the time-series discussed in the working paper are available from readily accessible, published sources. Others, however, are not. Among the more tedious figures to locate and compile are the Treasury Department’s currency figures." (Market History) Classic

Forget the Rule of Thumb: Saving 10% of Your Salary Is No Longer Enough, Jonathon Clements, The Wall Street Journal, July 20, 2005.  “Just when folks ought to be saving more, they are saving less. Trouble ahead? You'd better believe it.  Yes, I have heard all the arguments about how the true savings rate is higher than the 1.3% calculated for 2004 by the Commerce Department's Bureau of Economic Analysis, or BEA. But don't let that distract you from the bigger issue.  In a world of disappearing company pensions, skimpy bond yields, rich stock valuations and rising life expectancies, anybody interested in a comfortable retirement should be saving a truckload of money every year -- and yet most folks aren't." (Market History)  Seminar

From Economic Crises of Yore, There's Hope -- and Harbingers, Bob Davis, The Wall Street Journal, September 26, 2002.  "With stocks sagging, public anger at corporations rising and fear of war growing, what's in store for the economy? Is the U.S. in for a replay of the 1930s, when the economy snapped after a stock-market plunge? Or is it more like the 1960s, when war unleashed inflation? How about the 1970s, when oil shocks battered the economy?"  (Market History)

 [ G ]

Globalization and Capital Markets, Maurice Obstfeld and Alan M. Taylor, University of California, Berkeley and NBER, March 2002.  “The ebb and flow of international capital since the nineteenth century illustrates recurring difficulties, as well as the alternative perspectives form which the policymakers have tried to confront them.  The subsequent sections of this paper are devoted to documenting these vicissitudes quantitatively and explaining them.”  (Market History)

Great Boom Ahead, Harry Dent (PDF File)  (Market History)  Seminar

Greenspan Era Taught People to Gamble, Floyd Norris, The New York Times, July 22, 2005.  “The Alan Greenspan era, which is drawing to an end, deserves to be remembered as the era in which many millions of Americans were forced to become gamblers. That it was also an era when many of those gambles paid off should not obscure the fundamental change.  When Mr. Greenspan took over the Federal Reserve from Paul A. Volcker in the summer of 1987, the stock market was hot and there were warnings of a price collapse. The crash arrived, but what seems remarkable now is just how unimportant that was. No recession followed."  (Market History)  Seminar

 [ H ]

How Lawyers Helped Drive The Boom in Tax Shelters, Kara Scannell, The Wall Street Journal, August 18, 2004.  “Theodore Swartz faced a huge tax bill in 1999 after selling his tour business. So the Seattle businessman was interested when KPMG LLP proposed setting up an offshore entity that would create losses to offset some income without actually risking a penny, according to a suit he later filed.  To clinch the deal, the accounting firm said lawyers from Brown & Wood in New York would review the tax shelter and write a letter saying it would likely pass muster with the Internal Revenue Service. Taxpayers use such "opinion letters" if the IRS challenges their returns to show they relied on impartial legal advice, and perhaps head off stiff fines.  "KPMG said, 'Don't just trust us, trust this big law firm that will give you independent advice,' " says Duncan Turner, Mr. Swartz's lawyer. Mr. Swartz paid KPMG $250,000 to shelter $18 million in gains."  (Market History)

How Wall Street Stoked The Mortgage Meltdown, Michael Hudson, The Wall Street Journal, June 27, 2007.  “Twelve years ago, Lehman Brothers Holdings Inc. sent a vice president to California to check out First Alliance Mortgage Co. Lehman was thinking about tapping into First Alliance's lucrative business of making "subprime" home loans to consumers with sketchy credit.  The vice president, Eric Hibbert, wrote a memo describing First Alliance as a financial "sweat shop" specializing in "high pressure sales for people who are in a weak state." At First Alliance, he said, employees leave their "ethics at the door."  (Market History | Macroeconomics (Credit History))

 [ I ]

In Defense of the Boom:  If Wall Street Didn't Do It, Michael Lewis, The New York Times, October 27, 2002.  “A few weeks ago, on ''Moneyline,'' a guest who didn't fully understand just how much times have changed invoked some corporation's ability to beat Wall Street's forecasts for its quarterly earnings. Before you could say ''market manipulation,'' the program's host, Lou Dobbs, said, ''Do you really think anybody's paying attention to that silly expectation stuff anymore?'' He dismissed forecasts as ''the game of the late 90's.'' And he had a point. For many years, Wall Street analysts have low-balled their earnings estimates so that their corporate customers could announce to the press that they had ''beaten'' those estimates. This particular game was exposed beginning in the late 1990's by fledgling Web sites, which routinely published more accurate earnings forecasts than the Wall Street pros. By the middle of 1998 the stock market began to trade off the Web estimates rather than the Street estimates -- which tells you how fully understood this quarterly forecast game had become even before the boom reached its turn-of-the-century heights.” (Market History)

In Today's Buyouts, Payday For Firms Is Never Far Away, Greg Ip and Henny Sender, The Wall Street Journal, July 25, 2006.  “When a trio of private investment firms acquired Burger King Corp. in late 2002, the chain was unprofitable. But immediately, it started paying off for the investors.  At the time of the acquisition, Burger King paid its new owners -- Texas Pacific Group, the private-equity arm of Goldman Sachs Group Inc. and Bain Capital -- $22.4 million of unspecified "professional fees." Burger King also started paying the group quarterly management fees for monitoring its business, serving on its board and other services. The total reached $29 million by this year.”  (Market History (Private Equity Buy Outs))

Irresponsible Investor, Michael Lewis, The New York Times, June 6, 2004.  "Plug into a Google search engine the words ''investors'' and ''corporate corruption'' and you could spend the rest of your life reading about the many ways in which the former have been abused by the latter. Plug the same words into the company Google and you'll get a strikingly different result. In their recent letter to financial markets in which they lay out the ground rules for their public-share offering, the company's founders, Larry Page and Sergey Brin, insist that Rule No.1 will be ''Don't be evil.'' This, they seem to think, will strike their audience as a radical idea. That is because the audience consists, mainly, of investors. Five long years in Silicon Valley have apparently taught the Google founders a great deal about the people who are about to make them billionaires. The rap sheet on the American investor is long, but it can be briefly summarized." (Market History)

It's a Flat World, After All, Thomas L. Friedman, The New York Times , April 3, 2005.  “In 1492 Christopher Columbus set sail for India, going west. He had the Nina, the Pinta and the Santa Maria. He never did find India, but he called the people he met ''Indians'' and came home and reported to his king and queen: ''The world is round.'' I set off for India 512 years later. I knew just which direction I was going. I went east. I had Lufthansa business class, and I came home and reported only to my wife and only in a whisper: ''The world is flat.''   And therein lies a tale of technology and geoeconomics that is fundamentally reshaping our lives -- much, much more quickly than many people realize. It all happened while we were sleeping, or rather while we were focused on 9/11, the dot-com bust and Enron -- which even prompted some to wonder whether globalization was over. Actually, just the opposite was true, which is why it's time to wake up and prepare ourselves for this flat world, because others already are, and there is no time to waste."  (Market History)  Seminar

It's the Cycle, Stupid!, Sy Harding, Barron’s, September 12, 2005.  “Unless I am looking at the wrong calendar, stocks are headed for a rough patch next year. That's because 2006 is the second year of a presidential term, and the market historically hits a significant low in those years.  The trend has been strongest in long-term, or secular, bear markets, such as the period of 1965 through 1982. But the pattern has been clear through bull and bear periods alike -- and through war and peace, rising and falling interest rates, high and low inflation -- regardless of which party was in power." (Market History (Presidential Cycles))

Is the Big Board Getting Creaky?, Gretchen Morgenson, The New York Times, April 27, 2003.  “Just a few months ago, Richard A. Grasso, the chairman of the New York Stock Exchange, was a Wall Street hero. He brokered the peace between securities regulators and big brokerage firms, leading to a settlement in the Wall Street research investigation. He also moved forcefully to improve corporate governance standards among companies whose shares are traded on the Big Board. Quietly, Mr. Grasso became something of a statesman.  That was then. Now, the exchange is investigating its own floor operations for possible anti-investor practices, and Mr. Grasso and his institution are taking a pounding from angry investors who call the Big Board's trading system archaic, inefficient, unfair and arrogant. The statesman is under siege.”  (Market History)

 [ J ]

 [ K ]

 [ L ]

Last Days of Enron, Kurt Eichenwald, The New York Times , March 13, 2005.  “It has become the icon for an era of excess: the precipitate collapse of Enron, played out over the final weeks of 2001.  Now, Kenneth L. Lay, Enron's former chairman, faces federal charges that he lied about the company's financial state in those weeks; his criminal trial is scheduled to begin next January.  A new book, "Conspiracy of Fools: A True Story" by Kurt Eichenwald, a reporter for The New York Times, provides a behind-the-scenes look at Enron's rise and fall, including those crucial final days before its demise. The narrative was reconstructed through more than a thousand hours of interviews and thousands of documents, including records of secret witness statements to law enforcement officials."  (Market History (Enron))

Lockboxes, Iraqi Loot and a Trail to the Fed, Timothy L. O'Brien, The New York Times, June 6, 2004.  "When a United States Army sergeant broke through a false wall in a small building in Baghdad on a Friday afternoon a little over a year ago, he discovered more than three dozen sealed boxes containing about $160 million in neatly bundled $100 bills.  Later that day, soldiers found more cash in other hideaways near the Tigris River, in an exclusive neighborhood that elite members of Saddam Hussein's government once called home. By the end of the evening, they had amassed 164 metal boxes, all riveted shut, that held about $650 million in shrink-wrapped greenbacks. The cash was so heavy, and so valuable, that the Army needed a C-130 Hercules cargo plane to airlift it to a secure location."  (Market History)

Lost Gains, Departed Glory, Jonathon Laing, Barron's, June 2, 2003.  "Lincoln Capital, a storied growth-stock manager, sees assets shrink by 95%  Few businesses, after achieving a certain critical mass, offer the attractive characteristics of equity portfolio management. For one thing, stock funds throw off torrents of cash in the form of management fees while requiring little capital investment. Once rent, salaries and taxes are covered, the remainder of the revenue sluices to the principals of a management concern. The business is extraordinarily "scalable" -- it's not much harder to run $10 billion than $1 billion in stock funds. And, under normal circumstances, investors stick with their managers through thick and thin.  So it was a shock when Lincoln Capital Management, one of the most storied large-capitalization, growth stock managers of the past two decades, all but liquidated itself earlier this year.  Parker Hall, for one, is philosophical about the collapse of the firm he'd done so much to build and the obvious pecuniary loss of the aborted buyout by the younger principals. These days he spends much of his time serving as a trustee of the University of Chicago and an investment committee member at alma mater Swarthmore College. He's also involved with the Chicago Symphony and various civic organizations."  (Market History)  Classic

 [ M ]

Mania Chronicles:  Reflections Of A Skeptic Through The Mania And Beyond, Bill Fleckenstein, 1998-2202.  “Though the longest bull market in U.S. history closed at new highs on July 20, 1998, recent world developments have draped a pall over Wall Street just a few short weeks later. By early October, the S&P 500 is down 19 percent, the Dow down 17 percent, and the Nasdaq, having punched through a 2000 print at its July high, has taken a 25 percent beating. While the market has rewarded investors with impressive gains since the early 80’s - even more so since 1995 - there is a contemplative sense that this great period of U.S. economic expansion, and thus the stock market ascent, has reached its limit."  (Market History)

Many Companies Avoided Taxes Even as Profits Soared in Boom, John D. McKinnon, The Wall Street Journal, April 6, 2004.  “More than 60% of U.S. corporations didn't pay any federal taxes for 1996 through 2000, years when the economy boomed and corporate profits soared, the investigative arm of Congress reported.  The disclosures from the General Accounting Office are certain to fuel the debate over corporate tax payments in the presidential campaign. Corporate tax receipts have shrunk markedly as a share of overall federal revenue in recent years, and were particularly depressed when the economy soured. By 2003, they had fallen to just 7.4% of overall federal receipts, the lowest rate since 1983, and the second-lowest rate since 1934, federal budget officials say."  (Market History)

Maybe Investors Aren't Stupid After All:  Oft-Cited Study Is Revised, Jonathon Clement, The Wall Street Journal, March 31, 2004.  “This is a financial mystery story that cuts to the heart of three of today's biggest issues.  Was replacing traditional company pensions with 401(k) plans a huge mistake? Do small investors need financial advisers? Is it wise to privatize Social Security?  In each case, possibly the most critical issue is the competence of ordinary investors. Are they stupid, as many on Wall Street claim?"  (Market History)

Miller's Tale: Legg Mason's Revered Fund Steward Talks About Value, Metrics and His Optimism, Sandra Ward, Barron's, February 3, 2003.  “Not since Peter Lynch of Fidelity Magellan fame has an investor so captured the imagination of the stock-buying public and won the admiration of his stock-picking peers as has Legg Mason's Miller. He confounds and infuriates those who would buy stocks at a discount in his willingness to expand the boundaries of conventional metrics to determine the true worth of a company and its businesses. Yet he is revered because he is, so often, right. But he's merely mortal as well, and that has meant Miller hasn't escaped the misery of the markets during the past few years.”  (Market History)

Moral Hazard and The U.S. Stock Market: Analyzing The "Greenspan Put," Marcus Miller, Paul Weller, Lei Zhang, March 2002.  "When the risk premium in the US stock market fell far below its historic level, Shiller (2000) attributed this to a bubble driven by psychological factors. As an alternative explanation, we point out that the observed risk premium may be reduced by one-sided intervention policy on the part of the Federal Reserve, which leads investors into the erroneous belief that they are insured against downside risk. By allowing for partial credibility and state dependent risk aversion, we showthat this ‘insurance’—referred to as the Greenspan put—is consistent with the observation thatimplied volatility rises as the market falls. Our bubble, like Shiller’s, involves market psychology, but what we describe is not so much ‘irrational exuberance’ as exaggerated faith in the stabilizing power of Mr. Greenspan."  (Market History)

More Scandal, Less Appetite for 'Reform', Holman W. Jenkins, Jr., The Wall Street Journal, June 12, 2002.  "A better explanation for why a delirium that exhausted itself quickly in the mid-1990s burns so hotly today is the performance of the stock market itself. This time around Americans are hurting in their portfolios and looking for someone to blame.  Every generation seems to have to learn the same lessons. Brokers have always pushed the hot stock du jour. Speculative companies have always engaged in aggressive accounting, with egg on their faces if they fail (and sins quickly forgiven if the business succeeds)."  (Market History)

 [ N ]

 [ O ]

Once Again, Who's to Blame for Bubble Mania?, Holman W. Jenkins, Jr., The Wall Street Journal, June 12, 2002.  "It's sad when somebody blows a nest egg, but writ small here is investment folly since time began. Somebody had to supply the $4 trillion in paper wealth reputedly lost in the bubble. We trust most punters restricted themselves to playing with their mad money (one reason consumer spending barely hiccupped during the late, teensy recession) but some obviously weren't."  (Market History)

Our Ethical Erosion, Arthur Levitt Jr. and Richard C. Breeden, The Wall Street Journal (Opinion), December 3, 2003.  “From the neighborhood flea market to the New York Stock Exchange, markets rely, more than anything else, on trust. Market participants must trust -- and be able to verify -- that the goods offered are what they are supposed to be; that their offer is being considered without prejudice; that their orders are being processed fairly; and that the market isn't rigged to their disadvantage.  Since Enron filed for bankruptcy two years ago this week, it has become clear that investors' trust was taken for granted and abused not just in one company or one sector, but across the breadth of our market system. High standards of integrity and character seem to have slipped to dangerous lows at many firms.”  (Market History)

 [ P ]

 [ Q ]

 [ R ]

Recovery Feels Like Recession:  Economy Expands, Payrolls Shrink, Jeffrey M. Laderman, The Wall Street Journal, May 29, 2003.  "Economist Robert Hall has been puzzling over a thorny question for nearly a year: What do you call an economy that has started expanding again but keeps destroying jobs?  Mr. Hall heads a committee at the National Bureau of Economic Research, an academic group in Cambridge, Mass., that declares when U.S. recessions begin and end. In May of last year, Mr. Hall and his colleagues believed the latest recession might be over. Consumers were spending more and economic output was rising. All that the committee members needed to see was a few months of uninterrupted job growth to announce the end of the recession. "It seemed like the timing was imminent," he says."  (Market History)

Reform 'Hysteria', Robert J. Samuelson, The Washington Post, Wednesday, July 17,  2002.  "Nothing so needs reforming as other people's habits." -- Mark Twain "Nothing now so needs reforming as "reform" itself. Every campaign for reform tends to exaggerate the evils it seeks to correct. Public opinion must not only be informed, it must be inflamed. Problems must seem so fearsome that no right-thinking person could doubt the urgency of action. The result all too often is the illusion of reform -- changes that confuse, disappoint and occasionally make things worse. The present stampede to purge corporate America of investor fraud is a case in point."  (Market History)

Regulate the FCC, William Safire, The New York Times (Opinion), June 16, 2003.  “The Federal Communications Commission — in business to protect the public's interest in our nation's airwaves — has by a 3-to-2 vote opened the floodgates to a wave of media mergers that will further crush local diversity and concentrate the power to mold public opinion in the hands of ever-fewer giant corporations.  This troubles some readers, listeners and viewers who don't like homogenized news or one-size-fits-all entertainment forced down their throats. When I inveighed against this impending sellout a couple of weeks ago, thousands — no kidding, an unprecedented torrent — of e-mails came roaring in, many beginning "Though I consider you a rightwing nutcase on most issues, I'm 100% with you against this big-media power grab."  John McCain, chairman of the Senate Commerce Committee, was also startled by the public reaction to the Floodgate scandal: "750,000 people sent messages to the F.C.C.," McCain tells me. "This sparked more interest than any issue I've ever seen that wasn't organized by a huge lobby."  (Market History)

Roaring Nineties, Joseph Sitglitz, The Atlantic Monthly, October 2002.  "As the Chairman of Bill Clinton's Council of Economic Advisers, and subsequently as the chief economist of the World Bank during the East Asian financial crisis, Joseph Sitglitz was deeply involved in many of the economic-policy debates of the past ten years. What did this experience tell him? That much of what we think we know about the prosperity of the 1990s is wrong. Here is a revised history of the decade, by the winner of the 2001 Nobel Prize in Economics.  At the height of the 1990s economic boom—a period of unprecedented growth—capitalism American-style seemed triumphant. After sluggishness in the 1970s and 1980s, productivity in the United States had risen sharply, to levels that exceeded even those of the boom following World War II. Globalization was in full swing, and in ways that redounded distinctly to the good of this country. The North American Free Trade Agreement (NAFTA) and the so-called Uruguay Round of international trade negotiations promised to bring untold benefits to our economy. The flow of capital to emerging markets had multiplied sixfold in just over six years—a remarkable increase, driven by the search for ever higher returns. U.S. representatives at G-7 meetings and elsewhere boasted of our success, preaching to the sometimes envious economic leaders of other countries that if they would only imitate us, they, too, would enjoy such prosperity. Asians were told to abandon the model that had seemingly served them so well for two decades but was now seen to be faltering. Sweden and other adherents of the welfare state appeared to be abandoning their models as well. The U.S. model reigned supreme. There was even talk of a radical New Economy, in which incomes would soar and the very idea of a business cycle would be relegated to history.”  (Market History)

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Seeing Google With the Eyes of Forrest Gump, Gary Rivlin, The New York Times, August 10, 2004.  “Any investor intent on Google might do well to remember Gump.  When the makers of the 1994 movie "Forrest Gump" sought a plot device that would render its main character fabulously rich, they cast him as an early investor in what Forrest Gump described as "some kind of fruit company": Apple Computer. By dumb luck, the movie suggested, its guileless hero had amassed so many millions that he could finance a Gump Medical Center, build a Baptist church and allow the family of his fallen friend Bubba to live in luxury.  In the real world, though, Apple would hardly make anyone's list of Wall Street's greatest hits, despite its considerable business accomplishments. Like Google today, Apple was a young but profitable company celebrated by the media when it made its stock market premiere in December 1980. But because much of its future potential was already factored into its initial offering price, few other than the company's founders and its venture capitalists can boast they got rich off Apple."  (Market History)

Social Contradiction of Japanese Capitalism, Murray Sayle, The Atlantic Online, June 1998.  "It's not every day that a nation's economic woes -- and the whole world's -- come knocking at your door, especially when you are the only foreign family in a Japanese mountain village a couple of hours outside Tokyo. But by the turn of the year we had already heard so much amazing news about what everyone said was the world's richest and most admired economy that we were ready for -- well, almost anything. Even so, the request of the polite young man at our door on a snowy Monday morning was, to put it mildly, a surprise."  (Market History)

Stock Market Crash of 1929:  Irving Fisher Was Right!, Ellen R. McGrattan and Edward C. Prescott, Federal Reserve Bank of Minneapolis, December 2001.  “In the fall of 1929, the market value of all shares listed on the New York Stock Exchange fell by 30 percent.  Many analysts then and now take a view that stocks were then overvalued and the stock market was in need of a correction.  But Irving Fisher argued at the time that instead, the fundamentals were strong and the stock market was undervalued.”  (Market History)

Spinning Financial Illusions --The Story of Bubblenomics, Bill Fleckenstein, MSN Money, October, 14, 2002.  “What is a bubble? Webster’s New World Dictionary defines bubble as: A film of liquid forming a ball around air or gas.  A transparent dome.  A plausible scheme that proves worthless. Unfortunately, what has transpired over the last five years in the financial markets has been a bubble. While the entire market obviously won’t prove to be worthless, the declines in store for most securities will be tremendous.”  (Market History) Classic

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Tax Cut, Shareholder Pressure Stoke Surge in Stock Dividends, Jeff D. Opdyke, The Wall Street Journal, January 18, 2004.  “Since 1926, dividends have accounted for about 41% of the S&P 500's total return through the end of 2004. Looked at another way: Stocks, alone, returned 6.1% on an average annual basis. With dividends, the return jumps to 10.5%.  Companies have lots of room to continue lifting their dividend payments. S&P 500 companies last year distributed about 34% of their profits as dividends, way off the historical average of nearly 54%. Moreover, those companies combined have $594.6 billion in cash on their books, up nearly $100 billion in 2004 alone. That's enough money to pay a one-time, special dividend of $2.62 a share to every shareholder of an S&P 500 company -- even those that own the 114 S&P members that don't pay dividends.”  (Market History)

Technology, Information Production and Market Efficiency, Gene D’Avolio, Efi Gildor and Andrei Shleifer, Harvard University and Gildor Trading Company, 2001.  “A well-functioning securities market relies on the availability of accurate information, a broad base of investors who can process this information, legal protection of these investors’ rights, and a liquid secondary market unencumbered by excessive transaction costs or constraints.  This paper explores the effect of technological advances on these features of the market, emphasizing the incentives facing the producers of financial information.”  (Market History)

Three Bubbles,  (Market History) Seminar

Triumph of the Bull:  Stocks Look Better Than the Alternative, Andrew Bary, Barron's, June 16, 2003.  "The stock market to paraphrase Winston Churchill's comment about democracy, may not be perfect, but it looks better than the unattractive alternatives. The allure of equities over fixed-income securities, moreover, has been further enhanced by the new tax law.  With the sharp gain in the major market averages since their March lows, stocks aren't cheap by historical standards. The benchmark Standard & Poor's 500 index, at 988, trades for about 19 times projected 2003 operating profits, above the average price/earnings ratio of 15 over the past 20 years. The Dow Jones Industrial Average, at 9117, changes hands at about 18 times estimated 2003 earnings."  (Market History)

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Ugly Market Math, David Simons, Forbes Magazine, September 15, 2002.  "Every month you faithfully contributed the same percentage of your salary to an S&P 500 index fund. With the market now where it was in the summer of 1997, you figure you're at breakeven on everything you invested since then. You find hope in the familiar charts showing the growth of $10,000 over ten or 20 years. Take a deep breath before you read this."  (Market History)

U.S. Led a Resurgence Last Year Among Millionaires World-Wide, Robert Frank, The Wall Street Journal, June 15, 2004.  "Four years after a stock-market downturn flattened many investment portfolios, a new study finds that one of every 125 Americans is a millionaire -- reflecting a growth rate not seen since the late 1990s, at the peak of the stock-market bubble.  The 2004 World Wealth Report, compiled by brokerage firm Merrill Lynch & Co. and consultancy Capgemini Group, paints a picture of financial resurgence among the world's wealthy. The number of millionaires in the U.S. was up 14%, and the U.S. and Canada together added more new millionaires last year than Europe, Asia, Latin America and the Middle East, combined.  Most striking: the study found that in the U.S. and Canada, the number of ultra-rich -- those with investment assets of more than $30 million -- has reached 30,000, about the same number of people as live in Juneau, Alaska's capital."  (Market History)

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Wealth Trap, Thornton Parker, Barron’s, January 28, 2004.  “Who sells the stocks that retirement plans buy? If stocks are as good as baby boomers are told they are, why does anyone sell them? Boomers have been taught to save for their retirements and use the money to buy stocks. Doing that, they are told, provides capital that companies need to grow, so their stocks will grow and eventually pay the boomers' retirement incomes. The advice is neat, understandable and wrong.  Serious investors can learn why the advice is wrong by analyzing Table F.213 of the Federal Reserve Board quarterly Z.1 Flow of Funds Report, which shows the net issues and purchases of stocks by major issuing and holding groups, and Table L.213 which shows the market value of stocks held by these major groups. The tables are on the Fed's Web site¹, and go back for decades. Data for this article are in then-current dollars from the March 6, 2003, report. Dividends are not considered.”  (Market History ( Z1 Report))

Were the Good Old Days That Good?, Louis Uchitelle, The New York Times, July 3, 2005.  “Tom Rath, the protagonist in Sloan Wilson's 1955 novel, "The Man in the Gray Flannel Suit," certainly had his share of troubles: the stressful conformity, the constant striving for success, the superficial suburban friendships, the war experiences he kept hidden from his wife. It all ate away at him.  But Tom, like most Americans in the first three decades after World War II, took a rising standard of living for granted. When he needed more income to make ends meet, he simply landed a better-paying job. Indeed, at parties throughout suburbia, Mr. Wilson wrote, "the public celebration of increases in salary was common." And Tom didn't fret about medical bills, job security or the quality of public schools for his three children."  (Market History)

When the Bear Will Stay Awhile:  Winning Money Manager Tells How To Profit From Continuing Weak Times In The Economy, Sandra Ward, Barron's, February, 24, 2003.  "Our quest to find the right man to invest for these times led us to venture out in last week's blizzard, on a holiday no less, for an audience with Raj Gupta, the principal of RHG Capital and overseer of about $500 million of other people's money. The 19% a year on average he and his team have delivered after fees since 1997, with never a down year and very few down quarters, is an achievement that surely puts him in the ranks of the exalted."  (Market History)

Who Predicted the Bubble? Who Predicted the Crash?, Mark Thornton, Senior Fellow Ludwig von Mises Institute, 2003.  "Predicting economic behavior is inherently difficult. As Niels Bohr joked, "Prediction is very difficult, especially if it’s about the future." People and their economic actions are subjects of choice and change, unlike the subject matter of the physical sciences, which have fixed properties. Therefore the future must remain uncertain. Predicting the economy as a whole is fraught with additional dangers and complications, and all attempts to construct indicators of economy-wide change either do not have, or eventually lose, their ability to predict the future. As Paul Samuelson quipped, "Wall Street indices predicted nine out of the last five recessions?"  (Market History)

Will U.S. Manufacturing Go to Zero?, Mark Hulbert, Barron’s, June 23, 2003.  “For a glimpse of the future of U.S. manufacturing, look no further than the corn and wheat fields of the American heartland.  Representing half the nation's economic output before the Civil War, agricultural production still accounted for nearly 10% of gross domestic product at the end of World War II.  Fast forward to 2003, when combines with computerized fertilizing schedules do what scores of family farmers once did, and agriculture comprises less than 2% of GDP."  (Market History)  Seminar

With the Market Up, Wall Street High Life Bounces Back, Too, Gregory Zuckerman and Cassell Bryan-Low, The Wall Street Journal, February 4, 2004.  “A year ago, Bret Grebow, a 28-year-old who runs hedge fund HMC International, was taking cheap flights on JetBlue Airways and keeping a lid on his spending. But his fund's investment portfolio surged nearly 40% last year, and Mr. Grebow says he's confident that the market has regained its footing. So two months ago he bought a new $160,000 Lamborghini Gallardo. He says it was his first "treat" in months."  (Market History)

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Financial Panics

http://www.thehistorybox.com/ny_city/panics/panics_article2a.htm

Panic of 1819

Panic of 1832

Panic of 1836

Panic of 1837

Panic of 1837-1843

Panic of 1857

Panic of 1869-1871

Panic of 1873

Panic of 1893

http://en.wikipedia.org/wiki/Panic_of_1893

Panic of 1901

Panic of 1929

Panic of

Panic of 1907

Panic of 1907: Federal Reserve Bank of Boston,

Asset Bubbles

Symbol Guide

Academic Study,  Bearish Case, Bullish Case, "Debate," Federal Reserve

Investment Mine, Magazine Article Newspaper Article, Online Site, Research Report

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