Black Monday remembered - 4 March 1988

Some of you will be hearing this talk on 4 March. It’s a thought that gives me a slight jolt and a nostalgic shiver, not a special day to me like a birthday, a wedding anniversary, but one of those dates that means something to all of us, especially to all of us who were there – 4 March 1933, the day of Franklin Roosevelt’s inauguration, but also the day every bank in the country closed down. They called it The Day the Money Stopped.

And, then, to most middle-aged Americans and to young history students there’s 7 December, always a chilling reminder of that warm, Sunday dawn in Hawaii when the Japanese bombed Pearl Harbor and launched the United States into the Second World War. The 22 November in any year announces itself like a tolling bell: it was the date on which President John Kennedy was shot and killed in Dallas, and it pulls you up short to realise it will be 25 years next November and that the president who symbolised youth more than anything would be, if he’d lived, 71 in May.

To me there are one or two dates that I suppose have slid away into oblivion: 11 November comes and goes and in Britain and America the traffic doesn’t halt any more. No man pauses at a Cenotaph or the statue of an infantryman and tips his hat. He probably has no hat to tip, and I wonder if any schoolchildren start the day on 23 April as we used to do, to watch the teacher like the funny one in the new movie Hope and Glory use a pointer to jab at pink masses on the map of the world and say “Why are they pink?” which required the answer “Because they’re ours.”

The follow-up question was “And how much of the globe belongs to us?” “Two-fifths, Miss.” “Right. Very good, Cooke.” Empire Day, long gone but not forgotten. Now it is a joke again played with dates. I don’t know how such things come about. I doubt we ever know how fashions in jokes come about – the midget jokes, the nun jokes, the lightbulb jokes. How many spoilt little rich girls does it take to screw in a light bulb? Two – one to get the Pepsi and the other to call Daddy.

But there’s a new line going around here – I am at the moment in Los Angeles – which makes a lark of the people who say “Where were you on...” and you name a date. The point is to challenge the victim with a date which in fact has no meaning whatsoever, a random date which embarrasses him by implying that he ought to know it as a memorable one.

The other night the dapper ex-Yale man, the humorist Calvin Trillin appeared on a talk show out here and the MC trapped him at once with a meaningless date. “By the way” said the MC, “where were you on July the 5th 1985?” Trillin is no man’s dunce. His amiable face clouded for an instance. His eyes roamed the ceiling. “Let me...” he said “... er July the 5th 1985. Oh yes, yes” he said, “I was at home sitting in the kitchen er thinking that the president is kind of slowing down”.

The MC jumped in “How slowing down?” “Well” said Trillin ad libbing with deadpan gravity, “I think he suffers, as a lot of us do, from mental overload.” “Overload?” “Well yes, I’m always trying to forget how to spell the longest word in the dictionary which I knew as a boy and I can’t forget. If I could forget it I’d have room for more useful stuff.

"You see I don’t believe in the theory that we use only one compartment of our brain at a time. I believe we’re flat out all the time. Now if Reagan could forget some of those Hollywood anecdotes, some of the plots of those old Dana Andrews movies – there’s really not much call for them in the presidency – well for instance if he could forget those Dana Andrews plots then maybe he could recall the names of his Cabinet...”.

And I think this game, which it does take somebody really droll to keep going at, I think it came about because of the positive compulsion some people have ever since 19 October last year to ask where were you and what were you doing on Black Monday.

It’s true that, as with Pearl Harbor or the day Roosevelt died, most of us can come through with a little scene that we’re not likely to forget. I think I’ve told you several times about my old friend, by now just about my oldest, a sweet, merry man who lives simply, loves nothing so much as taking breakfast at a corner lunch counter and who, you would guess, must be, say, a retired history professor.

In fact in life he’s been an investment banker for nearly 60 years and down the decades I’ve kidded him whenever there was a recession, a sizeable setback to the stock market, because he never uses the word "depression" or "recession".

Every such setback, huge or tiny, he calls “a healthy shake-out” and on the infamous Monday last October 19 I was meaning to come up to New York from Long Island but it was a dazzling fall day so I called the pro at the local golf club. It’s a public course and by October the summer visitors have packed up and the regulars are at work tending their vineyards or potato fields or selling plumbing fixtures or whatever, so the course is wide open.

“Any time” said the pro, “One o’clock?” “Fine.” When I got there there was nobody in the very small clubhouse except a thin, small man leaning up against a beer at the bar. The television set was tuned to a station in Atlanta which the whole country gets, which has news going 24 hours a day. I looked up at it and it showed three lines of figures. The middle line said “Down 110”. I said to the thin man, “What’s it mean?” He looked at me as a slightly backward child. “Mean?” he said, “It means that’s it.”

I said to the pro, “Hold everything. I must call my healthy shake-out friend.” I got him in his office in New York. “How healthy” I asked him “is the shake out?” I hardly recognised his voice. No jokes, no gaiety. He was very glum. “It’s awful,” he said, “Awful. Where are you now?” I said, “I’m just going out to play eighteen holes with the pro.” At once his voice rallied. “Don’t buy any golf balls. They’ll be down to 25 cents tomorrow.”

Well by the time we were through and I came back in the thin man was still leaning a little more gingerly at the bar. Now the middle line said 508. “Five hundred and eight?” I screamed. “What’s it mean?” The thin man licked his lips and fixed me with his drooping eye. By now he looked on me as an advanced case. “Mean?” he said, “Mean? It means that’s it.” Before I went home, I phoned my banker again. “Well how now?” “It’s only money” he said.

Well, that slightly crazy story is my memory of Black Monday and I’m not going into it any more because I’ve just read about a man, a true prophet, who urges us to forget Black Monday and watch out now in the next few weeks for Black Name Your Day.

His name is Barry Ziskin and he’s no bearded soothsayer. He’s a quiet, low-key 35-year-old with a record of performance in the money markets that is remarkable because his hunches about the approaching behaviour of the market have been remarkable since 1976. I haven’t heard of anyone who has during those 12 years so uncannily anticipated the... not just the rollercoaster performance of the market, but interpreted the ups and downs as how and when the market would stabilise.

So as not to puncture the suspense I ought to describe how he reasons and how he has behaved, financially speaking, since he took over a money management firm he’s been with since 1975 when he was a stripling of 22. Ziskin’s firm has, to begin with, $150million in assets, most divided between individuals and pension funds. He himself boasts – no he’s not the boasting kind – he will confess to a personal net worth of about $10million.

For every year since 1976 he’s beaten the market. He did take a loss, if not a beating, on Black Monday but on the year as a whole he came out ahead. I said just now that his hunches have been remarkable. It’s the wrong word and it’s one he would resent. At all times he’s watching carefully many small movements not usually looked on as a series of warning signs. Well to spring the bad news first – he believes that very soon, he says in a week or two, there will be a drop in the market of about 400 points and this is why he thinks so.

First, since the middle of January, each quite small decline in the market has been accompanied by more and more stocks slipping to new lows and each time there’s a rally fewer steady, healthy, stocks climb to new highs. Next he notices that institutions have fewer cash reserves and together Ziskin believes these are symptoms of chronic weakness in the market.

Now he comes to the behaviour of investors. Too many of them, he believes, think interest rates are bound to come down, so if there is to be a rise heavy selling is inevitable. Also, he believes investors have not regained the confidence they had before Black Monday. They shuttle between hot stocks and a bad habit they picked up in the past few years – they are watching every takeover and never settling down on one or another.

All these he sees as signs of a continuing nervousness or what he calls an abdication of leadership among the pros that would produce a steady base from which the market could advance sensibly and safely. So the coming drop of about 400 points, the good news is that after another – he doesn’t call it a healthy shake-out, he calls it a much-needed washout – the air will be cleared.

Investors will learn that October really happened and he then believes the psychological environment will be there for a new and lengthy bull market. That is the good news from Barry Ziskin, the “much needed washout” man.

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