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| How Now, Darn Dow | |||||||
| Making perfect sense of the stock market | |||||||
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| July 29 — Wall Street investors took a “wild ride” with the “bulls” and the “bears” last week, making “margin calls,” selling “short,” buying “low” and finally accepting that the “Dow” needed to make a “correction” after the “telecom sector” dragged down the economy, even those typically reliable “index funds” and “blue chips” on the “big board.” |
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| DO I KNOW what the hell I’m talking about? Of course not! I’m a normal American like you, who leaves the nuts and bolts of my investments — a little nest egg I used to call “The Gersh Kuntzman Retirement Fund,” but now call “The Gersh Kuntzman Tuesday Night Bowling Money Fund” — to professionals who apparently have even less of a clue about what to do with my money than I do. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Then again, I’m
not even sure I understand what makes the stock market rise and fall at
all. What news events and trends tend to influence investors to buy and
sell stock? Why do stock brokers turn against a high-flying
telecommunications giant like WorldCom because of something as simple as
mistakes on expense forms? (If my friends turned against me every time I
fudged an expense form, well, I’d be pretty damn lonely.) What makes
analysts suddenly decide that an important, healthy company like Enron,
which our own honorable vice president thought was such a good company
that he asked its advice on energy planning, is actually a corrupt
amalgamation of high-tech shysters? The answer, increasingly, seems to be, “No one knows.” The Dow Jones Industrial Average — which people often call a “leading indicator” — tends to go up or down based on nothing in particular. Earlier this month, whenever President Bush spoke about the economy, Wall Street traders dumped stocks like a gangsta rapper dumping his syphilitic ‘ho. Yet this week, stocks rose after traders were greeted with the sight of Adelphia honchos John Rigas and his sons, Timothy and Michael, being led away in handcuffs by federal agents for stealing hundreds of millions of dollars from the company they founded. And they shot up directly after New York’s billionaire Mayor Mike Bloomberg said on a local radio show later that morning: “I’m just telling you what I’m doing with the monies that I have. I’m putting money into the stock market…You’re going to look back on today and say this was a historic time to buy quality companies.” How important were these comments by the mayor? Very, if you put stock in stock. Within a few hours, the Dow, which had been down at the time the mayor made his comments, had risen nearly 550 points. To finally determine just what social, economic and political factors affect the rise and fall of the Dow, I decided to spend all day Friday at my computer, watching every pitch and roll of our economy’s ship of state while comparing them to the events of the day. The Dow opened at 8192.61 at 9:30 am. Fasten your seatbelts; it was, indeed, a bumpy ride. 8,220: The Dow is quick out of the gate, jumping up nearly 30 points in the first five minutes of trading, as brokers learn that Mayor Bloomberg has just become the 10,000th American politician to use the expression “Don’t let the terrorists win.” Most react to the milestone by doing their patriotic duty and buying stock. 8,153: Over the next 20 minutes, the Dow plunges nearly 65 points amid new reports that the world’s largest terrorist groups al Qaeda and Hezbollah are again in merger talks. Stock analysts, so recently burned by the AOL-Time Warner marriage, say they are unimpressed by debt-ridden al Qaeda’s offer to buy Hezbollah outright for $1.5 billion in over-valued stock. 8,350: Twenty minutes later, though, the Dow hits its high for the day, just as the B-52s are singing “Roam” on the “Today” show summer concert series. Traders later say they felt emboldened to shore up long-battered telecom stocks on the grounds that the song is clearly a demand for higher toll charges for inter-cellular wireless calls. 8,175: A half-hour later, the Dow is back down amid rumors that Depression Queen Elizabeth Wurtzel has been named editor of a new publication called “Prozac Weekly.” But within 10 minutes, the Dow is back up to 8,235 when traders realize that “Prozac Weekly” is not a new magazine, but merely the name of drug maker Eli Lilly’s once-a-week version of their popular anti-depressant. 8,150: Twenty minutes later, the Dow takes another tumble as General Motors announces that its Saturn division will produce an SUV that will get better mileage than most passenger cars. Traders are spooked by the possibility that waste and overconsumption — two key sectors of the American economy — could be hurt by the more fuel-efficient truck. |
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8,235: Stocks are back up just 20 minutes later, as the Pope, on a
visit to Canada, tells children to “embrace Christianity.” A sudden rise
in economic activity follows as church-going minors rush out to buy mace,
stun-guns and Taser weapons to ward off unwanted embraces. 8,180: After a sudden, 100-point plunge, the Dow partially recovers over the next 45 minutes after a television station in Russell, Kansas, runs Britney Spears’s famous Pepsi commercial and Bob Dole responds by refilling his Viagra prescription. Traders respond with invigorated activity. 8,040: A half-hour later, the Dow hits its intra-day low when rescuers in Pennsylvania finally receive tapping signals from nine coal miners trapped below. What initially seems like good news quickly turns bad, however, as the Morse-code message the coal miners have tapped out is decoded: “Sell! Sell! Sell! Whatever you do, sell all our shares of Acme Coal!” 8,115: Ten minutes later, Alan Greenspan issues a statement proclaiming that he has come down with a case of “rational exuberance,” and the Dow responds by jumping 70 points. Greenspan later admits that he was talking about his Friday night plans to see “Austin Powers in Goldmember.” 8,085: Economic activity across the entire nation ceases for 30 minutes, sending the Dow plummeting. The Labor Department later reports that 100 million workers were using this exact moment to fight with their health insurance companies rather than performing their usual office duties. 8,212: A half-hour later, the Dow jumps up as a letter emerges that indicates that Ted Williams did indeed ask to be cryogenically frozen after his death. Traders are ecstatic when the New York Mets announce that nearly dead slugger Mo Vaughn will undergo the same “freezing” procedure before that evening’s game against the Cincinnati Reds in hopes of achieving Williams-like results at the plate. |
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8,234: Twenty minutes later, traders learn that former President Bill Clinton and former First Lady Hillary Clinton have asked the federal government to reimburse them for their Whitewater legal fees. Stocks soar as brokers briefly confuse the Clinton request with an upcoming IPO for chutzpah.com, a promising dot-com. 8,195: The Dow slips again 10 minutes later when President Bush appears to have gained the upper hand in negotiations with Congress over the so-called “fast track” trade bill. Such free-trade legislation was expected to boost stocks, but Wall Street quickly retreats after learning that the president was merely calling for better driving surfaces at NASCAR facilities, not a free hand to conduct foreign trade. 8,265: The Dow finishes strong, up more than 70 points at the closing bell after a New York Stock Exchange intern rushes to the floor claiming to have just seen Martha Stewart at a fabric store on Orchard Street buying burnt sienna material and gushing that it will “make a much nicer jumpsuit than that dull orange.” A-ha! Now it all makes sense. Gersh Kuntzman is also a columnist for The New York Post and a sportswriter for The Brooklyn Papers. His Web site is at http://www.gersh.tv/ © 2002 Newsweek, Inc. |
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