Call it "Black Friday" or maybe "Haunted April," but whatever you call it, the stock market meltdown this month, culminating with Friday's big sell-off, had an "end of the world" feel to it for investors who had been counting on the great bull market of the 1990s to continue well into the new century.
Now the bear is out of his cage and growling as the technology-laden NASDAQ completed its worst week in history, down 355 points or 9.7 percent on Friday, a drop that brought the composite index's loss for the week to 25.3 percent, and 34.2 percent below its record high on March 10 -- a date that now seems like something out of the distant past rather than just a month ago.Almost half of the NASDAQ's stocks fell 10 percent or more Friday with some giving back as much as 20 percent.
Although they initially tried to fight the tape, even the Dow Jones Industrial Average, filled mostly with "old technology" companies that haven't enjoyed the huge run-up of many NASDAQ issues, fell 7.2 percent or 617 points, its largest one-day point drop in history, and the S&P 500, long the mainstay of many retirement plans, lost 83 points or 5.8 percent on Friday as 87 of its 88 industry groups declined.
Utah portfolio managers didn't try to spin this week's sell-off as just another bad week on Wall Street.
"It was a total capitulation for the stock market," said Sterling Jenson, president and chief executive officer of First Security Investment Management Inc.
Another local broker went to far as to use the "C" word."
"It's a crash," declared Brad Hansen, senior vice president in the Salt Lake office of brokerage firm D.A. Davidson & Associates.
OK, it's been a terrible week, but what happens now? Is the worst over? No one knows for sure, of course, but Jenson believes Friday or Monday could see the end of the carnage.
"Over the weekend, people read the headlines and stew about it, they get fearful and on Monday they come out selling. But then we could start the recovery," he said.
What should investors do now? Frankly, there are not a lot of choices unless you're willing to sell and thus lock in what for most are now just "paper" losses.
"It's close to being too late to sell," confirmed Jenson. "I think people ought to see what happens on Monday or Tuesday and then look at the good companies, the ones with revenues and profits, and think about buying them. We're at the point now where you can buy technology stocks at bargain prices."
Hansen, of D.A. Davidson, agreed with Jenson that Monday could see even more bloodletting.
"The bubble that has been blowing up for the last two years has popped, and perhaps it will pop a little further on Monday morning when people who weren't aware on Friday of what was going on see what happened," said Hansen, who has been warning for some time that the market was way out of balance.
The bad Friday followed by a worse Monday scenario is precisely what occurred in October 1987, when a big sell-off on Friday, October 16, turned into "Black Monday" three days later.
"People then wanted to dump their stocks and money managers were forced to sell their assets," said Hansen of that market meltdown 13 years ago.
The worst casualties of this week's bear market, just as they were in the crashes of 1929 and 1987, are those stock traders who have bought shares on "margin" or credit. Now those traders -- they can't be called "investors" -- are getting "margin calls" from their brokers: Put up more money or we'll sell your shares, regardless of price, to get your account back into balance.
Hansen believes that the worse the market crash the better the buying opportunity for those who have kept money on the sidelines rather than committing it all to stocks priced way beyond any intrinsic value. In other words, if you thought a stock was worth $50 last month, you ought to be willing to buy all the shares you can at $27.50. Admittedly, though, it takes a leap of faith to buy shares in the teeth of a crash.
"A lot of wealth was developed in those earlier crashes by those who had the courage to sift through the emotion and buy quality assets at discontinued prices," said Hansen.
It may sound like whistling past the cemetery, but Hansen said there's a part of him that is "really grateful" for the big drop in stocks because it proves that those who buy and hold the shares of good companies are not the chumps they have appeared to be as billions of dollars have flowed into Internet and other high-tech companies, some of which have yet to make a dime and others that have been profitable but not that profitable.
For example, while local gas company Questar lost 56 cents on Friday, Qualcomm fell more than $21, Intel dropped nearly $11, Microsoft shed nearly $5, Cisco Systems was down more than $4 and Nextel Communications was off than $8.
Is there any consolation to be taken in the midst of the chaos? Well, yes, says First Security's Jenson, who reminds that the sell-off comes on the heels of the a huge run-up in a very short time.
As bad as the NASDAQ crash has been, it still only takes the index back to where it was in November, less than six months ago, so it's not like the tech sector has returned us to the Industrial Age.
"This is just going to shake out the new investors," said Jenson. "Those who have been investing in stocks they know nothing about. Those who get their stock 'information' from the Internet, friends, TV and such. In short, those who have no clue about what they've been investing in."
Deseret News business writer Jenifer K. Nii contributed to this report