Two days after reaching an all-time high, the Dow Jones industrial average slipped 7.83 points yesterday and closed at 3,664.66. But in the last five years the Dow climbed 1,514.77 points, or 70.4 percent. Three days before Halloween -- Oct. 27, 1988 -- the blue-chip indicator closed at 2,149.89.
HOPEFULLY HELPFUL: Since tomorrow marks the 64th anniversary of the stock market crash of Oct. 29, 1929, a sickening plunge that set off the Great Depression, we print two hopefully helpful quotations:
"Whatever men attempt, they seem driven to try to overdo. When hopes are soaring I always repeat to myself, 'Two and two still make four and no one has ever invented a way of getting something for nothing.' " ("My Own Story" by Bernard Baruch, famous financier, 1870-1965.)
"Tuesday, October 29th, 1929, was the most devastating day in the history of the New York stock market, and it may have been the most devastating day in the history of markets. It combined all of the bad features of all of the bad days before. Volume was immensely greater than on Black Thursday. Selling began as soon as the market opened; great blocks of stock were offered for whatever they would bring. The air holes, which the bankers were to close, opened wide. The worst day on Wall Street came eventually to an end.
"Some day, no one can tell when, there will be another speculative climax and crash. There is no chance that, as the market moves to the brink, those involved will see the nature of their illusion and so protect themselves." ("The Great Crash: 1929" by John Kenneth Galbraith.)
Ticker Note: On that "worst day" the Dow Jones average dropped from 260 to 230, an 11.5 percent decline. The market continued to fall until July 1932, when the Dow sank to 41.22, an 88 percent plunge from its 1929 peak, a devastating setback from which it did not recover for 21 years. By comparison, on Oct. 19, 1987, the day of the 508-point drop, the Dow plummeted from 2,246 to 1,738, a 22.6 percent free fall, but recovered within 18 months. (Decimals dropped.)
DEPRESSION PRICES: Regarding the above, here are prices from "A Depression Shopping List: 1932-1934": New Chrysler sedan $995; used '29 Ford $57; mink coat $585; wool dress $1.95; men's shirt 47 cents; men's shoes $3.85; wool blanket $1; dental filling $1; large toothpaste 25 cents; cigarettes 15 cents; doll carriage $4.98; sirloin steak 29 cents a pound; potatoes 2 cents per pound; coffee 26 cents per pound; modern house with six rooms and two-car garage $2,800.
And "Annual Earnings: 1932-1934." Bus driver $1,373; coal miner $723; dentist $2,391; doctor $3,382; hired farm hand $216; lawyer $4,218; public schoolteacher $1,227; secretary $1,040; steelworker $422; waitress $520.
DEPRESSION DAYS: As a teen-ager during the Depression I worked for my father, a Redwood Street stockbroker, after school and on Saturday mornings ($5 a week.) It was my job as a "board boy" -- long before electronic boards were invented -- to read a narrow yellow printed tape which flowed from the chattering "ticker" and then post rapidly falling stock prices on a huge blackboard in the smoke-filled "boardroom." Men and women wept openly as they saw their family fortunes wiped out. After supper -- 35 cents for a full meal in the Southern Hotel cafeteria -- Dad and I phoned customers for "margin" (money most people didn't have) to pay for their stock purchases, because in those days all one needed to buy stock was 10 percent down. Today, regulations require 50 percent.
BACK TO TODAY: Dean Witter's Jack Rosenbloom will send his firm's timely "Tax-Loss Swapping Opportunities" if you phone him at 547-7027. ("If you have accumulated losses on your stock investments, now may be the time to consider selling in order to use the losses to offset any capital gains. Losses exceeding total capital gains can offset up to $3,000 of ordinary income.") . . . Tomorrow night, "Wall Street With Louis Rukeyser" is titled, "Facing Up to the Deficit" with Peter Peterson, chairman, The Blackstone Group, with panelists Mary Farrell, Louis Holland and Bernadette Murphy . . . The latest "100 Highest Yields" says that the highest current money market yields in this area are at Eastern Savings Bank, Loyola Federal, Chevy Chase Savings, Washington Savings Bank (Waldorf) and Maryland National Bank.
SEVERAL BASKETS: David Fox, New Freedom, Pa., sends a letter, with figures, that show the value of diversification. The letter reads, in part, "Suppose you have $100,000 to invest over 25 years. If you place it all in one fund with a guaranteed rate at 8 percent, in 25 years you will have $684,850. Not bad, you say, but what do you think would happen if you were to put that same amount in five different funds? Using a realistic rate of return, suppose those five funds produced returns of 0 percent, 5 percent, 10 percent, 15 percent -- and the last fund was a total loss? After 25 years, with this diversification, you would have $962,800 (!) or $277,950 more than in the one-basket approach."