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Big Board chairman John J. Phelan Jr. may have to stick with "melt-down," since he is credited with being first to apply that description to the stock market's -- well -- meltdown. Not so American Stock Exchange chairman Arthur Levitt Jr., who in February rejected stark concepts in favor of "rapid decline." Fine as a definition, but as a euphemism, it suggests that one of the Street's traditional buying scenarios had simply been condensed into a six-and-a-half-hour stretch. That's like labeling 5.2 on the Richter scale an opportunity to shake martinis.

Revised concepts often pop up months after severe declines. When stocks plunge and nothing dire immediately transpires, the event gets shrugged off as an anomaly. It happened in the 1930s, and now, perhaps cheered by the imminence of spring and rebirth, a portion of the money-managing crowd also is entertaining the notion that little injury occurred after all. Some even see the crash in a positive light: the record downside volume demonstrated that trading structures were sounder than assumed. They didn't close like Hong Kong's, and price swings arent's limited like Japan's. So what if harried over-the-counter market-makers couldn't or wouldn't answer their phones that day or the next. It wasn't their fault that the SEC had granted dispensation to big-time hedgers to sell short at will (instead of only on upticks, as is still required for the rest of us). Or that the short-sellers viewed OTC issues such as are in INC.'s relatively poor-performing lot (see charts, left) as wimps that they could pressure into price submission.

The reason nothing catastrophic seems to have happened on Grayish Monday is that there remain far more positive elements than bad in the economy. One could conclude not only that equities are safe, but also that obituaries of the IPO market were premature. Indeed, doesn't the gain of 13.66% in a single month bring back the good old IPO days?

It could be that the revisionists are on track. If so, however, they should also revise the aftermaths of previous debacles. No doubt a bear market began last summer, and bear markets do not disappear after one losing leg. The view from the learn-from-history-or-repeat-it camp is that at least one more selling wave is in the cards. But bear markets do allow up-legs, even worthwhile ones. In 1972, an intervening rally in a bear market carried stocks to new highs before they fizzled and subsequently shucked half their valuation. Stocks aren't necessarily out of the picture yet. The again, neither is 1370 in the DJI -- half its high -- nor the unfolding of the fiscal complications that the Crash of '87 surely foreshadowed.

Last updated: Apr 1, 1988




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