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Black Monday Memories: why Dan Fuss was punching the air in joy

Black Monday Memories: why Dan Fuss was punching the air in joy

In a special series, leading City figures give us their recollections of the Black Monday, 30 years on from the great stock market crash of 1987 that proved a fantastic day for Loomis, Sayles & Company vice president Daniel Fuss.  

People ask me about 1907 too, but I wasn't active in the markets then. I do remember 1987 both on the bond and the stock side.

I remember that Monday in the fall very well. I was at a client meeting, where I managed a large bond portfolio and we had built up a large position in long US Treasuries and that was in short term peril.

I was at a board meeting. They said: “You're a credit man, we are looking at the portfolio and asking what are all these long Treasuries doing here?” I said they are cheap and they said of course they are, you're being pounded. I said they are offering more and more yield. At any rate I weathered it.

As I was going out of the meeting one of the staff members he said: “Dan come over here and look at the Quotron” - this tells you how long ago it was. Long Treasuries were going straight up and what I didn't know was that the stock market was going straight down.

So I walked back to the office, not even a mile, and I went into the office all rosy, thinking boy what a great market.

The president of the firm, who is a stock portfolio manager, and all these people are gathered around the Quotron, they all looked like they had to go to the IRS for a review or something.  The president got mad at me when I said bonds were up, he says the stock market is down. I went to the bathroom to punch the air and change my demeanour. That afternoon we started buying a bunch of converts.

A very different time would be 1973 -74.That one gives me the shivers because everything looked ok, '73 had a normal market correction. It was magnified, we had a growth stock phenomenon that gradually came apart in the middle in '73, but the average stock had gone down long before that.

Then you had a recovery, but the market didn't feel right. As you went over the end of '73 into '74, not only the market didn't feel right, congress stopped functioning for the first time in anybody's memory. Congress were sitting on their hands they weren't agreeing with anything. Everybody got very cautious.

The presidency was under attack - Watergate. The markets started to slide, the Fed took notice, certainly weren't going to do anything that was going to rattle things and then started supportive talk. And the market kept sliding.

Watergate was all over the front page by that time. The president, unlike Trump, had been very popular, and Nixon was getting us out of Vietnam, which was so unpopular in the US. Stocks and Treasury bonds were going down, despite monthly inflows from the corporate defined benefit plan.  

Finally, Nixon resigns and he is replaced by the recently appointed vice president. The market kept going down and then it got worse.

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