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Outlooks - August 2019

Perspectives - Q3 2019

Onward to 2020

By Bill Koehler, CFA

Time stands still for no one. It seems like yesterday when, as a newly minted securities analyst employed by a Midwestern bank in the summer of 1982, I was quickly scribbling down stock quotes with my sharpened pencil. The quotes were relayed to me through the phone by “Bob”, the bank’s local Dain Bosworth broker. I would call Bob each day at 9am, 11am and 2pm and record the most recent stock prices, on a clipboard with “xerox” paper, for all 50 companies in our Harris Bank-inspired trust department investment portfolios. I would then hand the clipboard over to my boss, the Chief Investment Officer, and we would study the prices together. The digital age was in its infancy. The bank did not yet have a Quotron machine for retrieving quotes, much less any type of desktop computer or Bloomberg terminal as we have today. In retrospect, I was the Quotron!

One particular afternoon, August 12, the numbers were lower than they had been all summer. As the Dow Jones Industrial Average closed at 777, I remember thinking, “Could the Dow possibly be 700 by Labor Day?” Bad news was rampant, as was investor anxiety. There was speculation that if President Reagan were up for election in November of 1982, he would be beaten. August 12 was a Thursday. The Mexican Prime Minister informed the U.S. Federal Reserve that Mexico was going to default on certain short-term debt and that its foreign exchange markets would be closed on Friday. Penn Square Bank in Oklahoma had failed in July. However, little did I (or anyone) know that day would mark the start of a tremendous bull market from that 777 low. Investors wouldn’t see Dow 777 again. From that low, an eventful and, in many ways, astounding 37 years later we sit close to Dow 27,000.

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