The upsides of a
four-digit Dow: There are certainly some buying opportunities, and it will lead to a search for better ideas in finance. That's what happened in the Great Depression, as mentioned in my recent
piece on "The Investment Classics":
It was in the Great Depression’s crucible that the classic theories began to take shape. [Benjamin] Graham, who had come to Wall Street in 1914 at age 20, had started a high-flying career as an analyst and money manager but was battered badly by the 1929 Crash. The year before, he had taken up a sideline of teaching at his alma mater, Columbia University , and now his lectures there focused on developing a safer investment strategy. In 1934, Graham and fellow instructor Dodd published Security Analysis, a textbook that soon will be available in a sixth edition issued for its 75th anniversary.
[Philip] Fisher also got a close-up view of the Crash and its aftermath. He began working as an analyst at Anglo & London Bank in San Francisco in the late 1920s, and was head of the institution’s statistics department when the market plunged. In 1931, he started his own investment firm, Fisher & Company, reasoning that customers still in the battered market might be ready at this point for a new broker. Plus, it was a good time to be doing investment research, since managers at hard-hit companies now had more time to talk.
