Freeze Watch? You know what, I looked all over the place at NOAA and National Weather Service glossaries and found no listing for a Freeze Watch. Matt Milosevich said he never heard of it before either. But, then again, he went to the University of Oklahoma. Jay Cardosi said he’s heard of it before and agreed with my assessment that it probably means that a freeze is possible but not necessarily imminent. He said typically they put out the watch 48 hours out and then either change it to a warning or cancel it. What I showed previously for the wind forecast aloft. Above, you see the NAM 12Z 10.29.08 925mb map. While those winds are running right along at near 30 kts at about 2500 feet, ours at the surface will be still in the 7-15 mph range. Because of the breeze and low dewpoints, we won’t have any frost. We will mix down some warmer air from aloft so what might be a low in the mid 20’s area wide on a calm, clear night will be upper 20’s or mainly low 30’s. (see explainer previous post) So, the Freeze Watch got changed to a more conventional Freeze Warming. The airport, where no one lives, probably won’t be below freezing nor extreme southern areas…but it will still be cold. Frost will be possible on Thursday morning and by Halloween…look for a high near 70.
On This Date in History: On this date in 1929, the stock market crashed. The Dow had been quite
volatile before suffering a sharp drop on Oct 24 and then again on Oct 28. On Tuesday October 29, 1929, a day that became known as “Black Tuesday,” The market collapsed. 16 million shares of stock were sold as prices tumbled with a loss estimated at $9 Billion, which was a lot of money back then. The decline continued and by mid-November losses totaled some $30 Billion. (Video from 1929)
Fortunes were lost and eventually jobs were lost
and then there was the Depression that followed. Many historians of economics suggest that it was not the stock market crash that caused the depression, but rather governmental action and reaction that caused the economic malaise. Congress passed the Smoot-Hawley Act that raised tarriffs on 3200 imports by 60% in late September. On October 21, Congress defeated an attempt to exempt agricultural goods. Three days later, the market began its decline. President Hoover could have vetoed the measure but instead signed it 7 months after its passage and the resulting market crash. Prices on many good rose. Taxes were also increased. This is why you hear politicians today say that now is not the time to raise taxes and not the time to be closing the global market place.
Why would they say this now? We are in a stock market decline with shares falling some 40% from the all time highs of a year ago. I have compared this with the panic of 1907.(Click Here) However, I must say that history is not prescriptive and what happened in the past does not necessarily repeat itself. The times and conditions are different on a number of levels.
Nevertheless, if you must look at history as a guide, you need to know the truth. In general if you bought stock at the highs in 1929, you did not see your portfolio back to even for 25 years. Some individual stocks took longer than that. The speculation running rampant in the “Roaring 20’s” was probably more comparable to the run up in the market in the 1990’s than this past run. The decline in the late 1920’s into the 1930’s was about 87%. An 87% of a drop from the Oct 2007 highs would be about 1700 which would take us back to the 1980’s. This latest fall took us back to numbers we had in late 2001 and early 2002. So, we’ve gone up and down and up and down again in the past 10 years, which is not comparable to the 1920’s, 30’s, 40’s and 50’s.
Anyway, with all that in mind, I offer you this. It is an excerpt of a letter written by Earnest Elmo Caulkins to
the New York Times on this date in 1929, the day after “Black Tuesday.” Caulkins was a successful advertising executive who had a rather extraordinary life story.(Click Here) He was deaf but was an achiever who did not let his disability get in his way. It’s really remarkable when you consider that he did this in the late 19th and early 20th century when it was particularly difficult for deaf individuals living in a hearing world.
He began by saying “I have a feeling that fewer persons are affected by the stock market drop than one would infer from the figures, just as fewer persons were affected by the previous rises.” That can be said today but not entirely. Today, millions of Americans have pension plans and 401K plans that are affected. For instance, I have a 401K but its decline does not affect my standard of living today.
He goes on to say that one day, the men on the market decide his AT&T stock is worth $310 and a few weeks later $232. He bought the stock at $98, so he is disappointed but he doesn’t consider it a loss. First off, he points out that its still more than twice as much as what he paid for it. So, to suggest that lumping he and other together and say that millions have been “lost” is a false implication. Compared to the previous day its a loss but compared to a few weeks before, he’s even and compared to prior to that, its a gain. I think what he is pointing to is the only difference is time. Millions of shares were NOT traded and for those who did not trade, what was a great position of happiness and wealth in September was being characterized as a position of gloom and despair in late October.
He went on to review his portfolio and said that his previous high profits were on paper and his recent losses were on paper and reasoned that the two cancel each other out. He concluded with a story of a farmer who told his friend that Mr. Stebbins offered him $200 for his horse. The friend replied, “But Stebbins ain’t got $200.” The farmer answered, “yes, but ain’t it a good offer?”
Much of what Caulkins says here is true today. The Dow at the end of Jan 1980 was at 874.40. Oct 28, 2008 it closed at over 9,000. Yet, in October 2007, the Dow hit 14,000. When I worked at Merrill Lynch, my office mate, Martin Feinberg, used to say “Stocks go up and stocks go down.” They do. The question here is time. We like it when stocks go up quickly but then get upset when they fall quickly, as if one is normal and the other is a crisis when, in fact, both signal volatility.
I have always reasoned that it is not wise to “play the market.” Over the past 30 years, people have entered the stock market like they are going into Churchill Downs to bet on the ponies. Men like Caulkins entered as investors.
I guess what I am saying is that it’s silly for people to claim this is 1929 all over again. I took a look at 1907 but I never suggested that this was 1907 all over again. That was then. This is now. The future has yet to be written. It is often said that it’s not whether we face adversity but how we react to adversity that counts. I’ve read a quote from Vince Lombardi(inspirational quotes) (origin probably elsewhere) that said “the greatest accomplishment is not in never failing, but rising again after you fail.” The past is the past and its how we conduct our future, whether it be governmental policy or personal actions, that really counts. With global intervention, coordination and new policies, this may be the beginning of a turnaround and, then again, it may be the beginning of a long fall. Who knows for certain? But, I do know that nothing lasts forever either way. If you believe that the sun rises every day and will again on this nation, this economy and the global economy, then invest in the future. If you do not, then stay out of the market. In my view, its as simple as that. Mr Caulkins overcame his disability and had great confidence in the future. You need to ask yourself if you have the same ideals.