Word: portfolios
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Dates: during 1980-1989
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This makes the concept of modern markets hard to understand and difficult to explain, even for the distinguished explainer Martin Mayer. Following an arcane account of a portfolio-hedging strategy, he writes, "You can read it twice, or three times, or you can take my word for it." Which is sound advice. Mayer has been one of the educated layman's best guides to the covert worlds of Wall Street and finance. The Bankers (1974) was a best seller. More recent books include The Fate of the Dollar (1980) and The Money Bazaars...
Many stockholders lost a great deal of money in October's financial disaster, but not everyone went bankrupt and few intend to advertise their losses by changing their lifestyles. They learned that there are better ways to protect earnings than a stock portfolio--precious metals don't disintegrate or disappear like paper profits. Real estate from Manhattan to Malibu will become the most popular goods on the market...
...contend many Wall Streeters, who blame in particular an instrument called the stock-index future. Traded largely in Chicago, such futures enable investors to place bets on the performance of New York stock indexes like the Standard & Poor's 500. The futures, first introduced in 1982, gave portfolio managers a chance to hedge their cash investments in the stocks that make up a particular index. But the futures also gave investors the opportunity to engage in index arbitrage, a practice in which they can reap quick profits from temporary, often minor discrepancies between the two markets by launching simultaneous, computer...
Among the six major investigations of the crash, three concluded that computer-driven index arbitrage and a related strategy known as portfolio insurance were at least partly to blame for the speed and severity of the 508- point drop in the Dow Jones industrial average. The Brady commission, which the Reagan Administration appointed, contended in its report last January that Chicago's futures markets have gained inordinate leverage over New York because the two marketplaces play by such vastly different rules and fail to monitor their complex interactions...
...financial markets for one hour if the Dow fell 250 points from the | previous day's close and for two hours if it dropped 400 points. In congressional testimony later in the week, Greenspan defended stock-index arbitrage and computer trading as forces for stability rather than volatility, enabling portfolio managers to reduce their risk...