One Year Later, Shaky Optimism Prevails : But Day’s Trading Indicates Investor Sentiment Remains Fragile

Just outside the New York Stock Exchange, writer Tom Wolfe spent $1 Wednesday morning for a bumper sticker that read: “I Survived the Stock Crash of ’87 . . . But I Used to Drive a Mercedes.”

He turned to mug for a French camera crew in the crowd behind him and clapped his arm around the bumper sticker vendor, joking: “What you don’t know is that this man used to be head of Salomon Bros.’ trading desk.” Wolfe turned and waded through a crowd of tourists, journalists and vendors into the exchange, which he said he was visiting “to assure myself the Republic is still sound.”

Wolfe, who chronicled bull market excess in his novel “The Bonfire of the Vanities,” was making a cameo appearance in Wall Street’s observance of the first anniversary of Black Monday. Although there was no official ceremony to remember the debacle of Oct. 19, 1987, the occasion nonetheless drew crowds of the curious, and a crush of journalists, to lower Manhattan.

The day also moved Wall Street pros to rueful reflection, gallows humor and, in some cases, defiant predictions of the market’s resurgence.

The market itself, however, didn’t want to cooperate with those predictions. The Dow Jones industrial index, which lost a historic 508 points in the convulsive trading of a year ago, ended trading Wednesday down 22.58 points after a false rumor that the Washington Post planned to publish a story asserting that Vice President George Bush has mistresses.

The Dow was off as much as 44 points in mid-afternoon but pulled back after Washington Post Executive Editor Benjamin F. Bradlee issued a statement declaring rumors that the newspaper was preparing such a story “unfounded and untrue.” Some market analysts said the drop showed the fragility of investor sentiment on the anniversary of a day still freighted with bad memories for many investors.

When the market turned down, a trader turned in exasperation to specialist James J. Maguire to suggest that “they ought to close this place permanently on Oct. 19th,” Maguire said.

Yet many on Wall Street put on their most optimistic face for the occasion. The New York Stock Exchange’s opening bell drew a roar from the floor, which specialist Robert B. Fagenson interpreted as a message to the crowded public gallery that “we’re here, and we’re alive.”

One Big Board clerk wore an old faded button that read, “We do it best,” and a newer one that insisted, “We STILL do it best.”

Others in the investment world marked the historic occasion away from Wall Street, some in unusual ways. The money management arm of the Travelers insurance company held a special staff party to celebrate their faith in the high-tech investment strategies called portfolio insurance, which some critics have blamed for worsening the crash.

As many observers concluded after the crash that portfolio insurance’s claims to protect assets against a downturn were unfounded, the value of assets in such programs began to fall sharply.

But Travelers Investment Management Co. “believes our way of doing this works, and that’s the reason for our party,” said Kent Kelley, executive vice president of the Hartford, Conn., firm.

A year ago, when the crash was ruining appetites all over the world, the unit decided to keep calm and ordered a buffet of Chinese food. This year they remembered the event by doing the same, and “it looks like we may make this a regular event,” Kelley said.

Some investment professionals used the anniversary for soul searching. The managing directors of Marinvest, the money-management unit of Marine Midland Bank, had a brown bag lunch “to think about the risks of this business, and the future,” said Denman Zirkle, one of the directors. “This seemed like a pretty good opportunity for that kind of thing.”

Many Reporters Show Up

John J. Phelan, Big Board chairman, joked recently that he planned to hire a blimp to circle lower Manhattan to mark the anniversary of the 19th. If stocks were rising, the blimp would flash the Dow’s level. If it were declining, he said, it would flash, “Whoops!”

As it turned out, the Big Board held two press briefings Wednesday to help the dozens of U.S. and foreign reporters who showed up looking for news. But there wasn’t much to say. Richard Torrenzano, the exchange’s chief spokesman, opened his morning briefing by asking, “So why are you all here?”

Torrenzano did announce that the market reform measures approved Wednesday by the Securities and Exchange Commission would become effective at the Big Board at the opening of trading today. Those reforms, the most important to be adopted since the crash, provide for coordinated trading halts across all markets if the Dow falls 250 points in a day’s trading.

“I think in the past year we’ve seen that the markets are strong,” said Big Board specialist Fagenson. “But some people still have to shake off some of those old fears.”