The stock market was down just under 2% today, Friday October 19th. Not a good day, but relative to 25 years ago, a GREAT day.
I recall October 19, 1987 quite well. That was the day the Dow Jones Industrial Average dropped over 500 points in one day, which at the time was over 20%. Think about that - a similar drop today would mean the Dow would fall over 2500 points!
Can you imagine the near and maybe real panic that would cause today, in the U.S. and around the world? People would be non-functional. At least the 40+% drop in the stock market in 2008 was more of a cascading crash, since it happened over the course of many weeks/months.
25 years ago, I was less than two years out of college, working an entry-level job setting up 401k plans for employer-customers at Principal Financial Group in Des Moines. Oh, and I had just found out we were expecting our first child. But I never felt like I was in danger of losing my job - if anything, there may have been more job security. Principal needed more help after that, as the 'yuppies' of that generation suddenly concluded they should be saving more money (inside a 401k plan was one way) instead of spending every dime they made.
Looking back, one of the crazy things about that day was we were not in the 24-hour news cycle that we are today. We weren't following the crash using TVs or the internet (the what?). We just got periodic updates throughout the day, near the end of which we learned of the 500+ point drop.
One of my favorite stories from that day actually didn't happen until the next day, when we were ushered into a meeting with some Principal executives, who told us to tell employer-customer not to be alarmed, it was 'business as usual' there - except now we weren't going to do this, or this other thing, or that, or that other thing. In other words, it was the opposite of business as usual. Clueless morons!
In the end, the market and the economy came back stronger than ever, setting up the 90s for another big bull run. Is that why people think the current recovery seems non-existent - because it isn't happening fast enough?
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