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WHITBY FREE PRESS, WEDNESDAY, NOVEMBER 4, 1987, PAGE 7 PAGE SEVEN I "ER I EWELL, AT LE-. LUMCA TrE CLUEB r4oW POE5Nr TREqU)RE A RE5ERVATIOtýJ! *y ougAndmo MEDIA MADNESS Following last week's column on the stock market collapse, I undertook a simple piece of research to find out how significant the "bloodbath" was. I wanted to get a fix on just what proportion of the market participated in the drop in share values. Seventy-seven million shares were traded on Black Monday. My initial guess was that that represented a pretty small proportion of the total shares on the market, say 2 - 5%. I phoned up the Toronto Stock Exchange last Friday to find out the total number of shares listed. I was connected to stats. They didn't know - "Try listings." It was clear that in· the two weeks since Black Monday, I was the first person to ask them this question. Listings said, "Try stats." I protested. It was suggested I talk to the supervisor in stats..... Eventually stats came up with the number - 28.7 billion shares. Seventy-seven million is only 0.27 percent of that total number of shares. Since it is reasonably certain that many, probably most, were traded more than once on that day, we can conclude that "crash of '87" was caused by less than one-quarter of one percent of the market - that that tiny percentage was being cast as deciding the fate of the world economy. The flipside is than 99.8% of the stocks were not participating in the panic and it is a reasonable assumption that the owners of those stocks were reasonably happy with their holdings regardless of the price drop. Indeed many large corporations have moved to buy up any of their shares that go on the market at fire sale prices - they know what their shares are worth. An analogy would be an appliance store with 400 TV sets for sale at $600 each. If I persuade (by fair means or foul) the owner into selling me one for $450, does that make the other 399 sets worth only $450? Why should the sale of a similar proportion of shares be regarded as affecting the value of the remainder? The only shares that actually lost value in the last few weeks were the ones that were actually sold. The only people who lost money were the gamblers who panicked and sold out. As those who read last week's column will remember, I used the space to berate the casino atmosphere of the stock market system which has produced the wild gyrations over the past two weeks. As I stated, the crash in itself is basically irrelevant because the assumed losses are only on paper. Black Monday will become a recession only if we make it one. If we postpone purchases or investments because of financial uncertainty, the economy will indeed slow down. (And market analysts will remind us of how accurate the market was in predicting the slowdown.) People obtain the bulk of their information throught the media and for the last few weeks the TV, radio and newspapers have been full of all kinds of disquieting comparisons to the crash of 1929 and the Great Depression which followed. Our parents and grandparents lived through the 1930's and their memories of their hardships have had a permanent affect on our national psyche, more so than either of the two World Wars. When Black Monday came, the public was accutely aware of what could follow. The media trumpeted the fall with headlines four inches high. They talked about the trillions of dollars that had WIB OLGAEISIUECAS .10 supposedly been lost. They sought out the super rich who had Nvme stemnhfrCmecmn xrie tteHg col nWibwe supposedly lost tens or even hundreds of millions. Theythgruaereevterdpomsndris.Tscasoftdnsdtsfomheie published pictures of stock traders with blank, exhausted,WhtyhdaoleatIntttbcusithdmrtan8LtnscorsInheak shell-shocked faces. They quoted the bears of the market whoro arEvBelEnaMtsnetudPaonLiiaNchsnCraernan (almost gleefully) predicted how bad it would Wbe. Thetymth maodeir nwni tefon o i dthBres hrdfo dire predictions about what a bad Christmas this was going to telf be. lIn short they sensationalized. They sought out the dramaWhtyAciePoo and to heck with accuracy and balanced reporting. 1 ER G Considering that none of them seem to have bothered tofomteW nsayNvmbr2197dtonfte consider the shares that were not traded, the level of reporting W î~ ~ was incredibly shallow ... and dangerous. If the people respond *Wib ats hrhhnrdogns]hi ietrEihSmesfr3 r fsrie to a perceived economic crisis by reducing their spending, they *MyrJmGrsoepeit abrdvlpetcudtk 0yas may precipitate that very crisis. The power of the media to usl el h edmn fie nAlSit nlcnCuc o 4yas ido provoke a world economic collapse is frightening. As a neophyteOcoe25tthaeof8 te he ounalstc tad, Iamshokedattheirespnsbiltyof Nebed s are beingtaedor thmecemetb Exercisufes to oherg coolsin Witywe my colleagues. However, perhaps John Q. Public is smarter than we give 25 YEARS AGO him credit for. Perhaps he has already read too many four-inch from the Thursday, November 1, 1962 edition of the headlines of gloom and doom to take them too seriously, for so WHITBY WEEKLY NEWS far the general public reaction to the market collapse has been The new Brewers'Retail and A & P stores will open later this month. ho-hum. Major department stores gearing up for the Christmas The Brock Street bridge at the harbor will open on Nov. 10. season see no signs of caution among their customers and the*Ontario County Council is debating whether to assume Victoria Street east of Brock Street owner of the major packaged tour company is in his best season as a county road and bring it up to standard. ever with no slow down in the last two weeks (and vacations in the sun are definitely a luxury item). 100 VEARS AGO Even the investing public has not shown much reaction. from the Friday. November 4, 1887 edition of the Mutual funds which have drawn tens of thousands of new WHITBY CHRONICLE investors into the market over the last couple of boom years The Ontario Bank increased its interest on deposits from 3 to 4 per cent. have experienced only a 1.4% pullback over the last two weeks - *Charles Sarney, Editor of the Whitby Gazette is moving to Thamesville ne.r London, far less than they expected. Ontario to publish the Herald. The last two weeks makes the need for drastic market *Hardware merchant Jacob Mcîntyre has leased space in the town hall at Brock and reform self-evident. Let the majority - the 99.8% of the market Coîborne Streets as a showroom for stoves. that kept their cool - decide the state of the econoTey.