First published in The Sydney Morning Herald on October 21, 1987
Blood on the bourse as the market turns feral
Human nature levied its own wealth tax at the Sydney Stock Exchange yesterday.
Fortunes were halved and some of Australia’s wealthiest companies and investors brutalised when the market turned feral.
In the rain outside the exchange building, spruikers were selling umbrellas with the cry: “Break your fall with a brolly!”
Yesterday may have brought an end to what has been called “conspicuous consumption” for one group at least – stockbrokers.
Towards the end of trading yesterday stockbrokers, especially employees who have been playing the market on their own account, were making jokes about cheap BMWs, riding out a depression by trapping rabbits and blessing their lucky stars that they had not bought into high-priced Sydney real estate.
Others were pale and solemn at the prospect of the sack, bankruptcy and eviction.
And inside, market observers agreed that the people thinking about leapers’ ledges were those heavily in debt on share deals.
No-one was admitting that they had gone into debt to invest in the share market or had borrowed heavily against projected share income to finance high living and property deals. But they all knew it was happening.
“I do have stock but I own it,” one broker said. “I’ve paid for it and I’ve got money in the bank. It’s the people on credit who are in trouble.”
Said another: “I would hate to have spent $300,000 or $400,000 on a house … thank God I was losing bidder on a house at the weekend.”
A spokesman for K.J. Polkinghorne and Co said that there was “genuine panic” among investors.
“We were all in at work at 8 am and people were ringing up to see if their debentures were safe and if that’s not a panic I don’t know what is,” he said.
As early as yesterday morning, key market players, including the flamboyant stockbroker Rene Rivkin, were saying that the stock market fall would trigger a drop in the overheated Sydney real estate market.
Mr Rivkin said that his own firm was protected from losses but the market had fallen to “ridiculous” levels.
“I rest easy,” he said. “You know why? Because I had a brain tumour five weeks ago and I haven’t bought a thing. The brain tumour was the best thing that’s ever happened to me and you can quote me on that.
“See these?” he asked, waggling his solid gold worry beads. “The value of these hasn’t dropped in the last hour, has it?”
(Mr Rivkin’s tumour was nonmalignant and successfully removed.)
As if to deny the market’s instinct for disaster, two operators were seen laughing and playing two-up on the deserted exchange floor during the lunch break.
The public gallery was crammed with people who had come to the exchange just to see history made.
Mrs Ann Pigott travelled from her St Leonards home to see the early exchange trading because “it hasn’t happened in our lifetime and it’s an important event”.
Others came, like crowds to the Colosseum, to see bloodstains on the bourse. Many believed that the brokers and speculators had grown too greedy and had got what they deserved.
One man, an accountant, said that he had stockbroking friends who had gone into debt to deal in shares on their own account and who would not recover from yesterday’s crash.
“I’ll be ringing a few of them tonight to see how they are but they will have done badly,” he said.
Late yesterday, when the floor operators were screaming like refugees at the locked door of a bomb shelter and the public gallery was packed, the talk turned to a suspension of trading. But a senior member of the exchange said it would not happen despite what he called “a devastating day”.
“We are a marketplace, we can’t suspend,” he said. “If we close down the market will go outside and people will be buying and selling in O’Connell Street.”
In other words, panic and the market’s over-riding forces – greed and fear – have taken an unshakable hold. And wherever there is panic there are rumours. Yesterday there was talk that exchanges in Japan and New Zealand had been closed, Iran had declared war on America and “you can kiss it all goodbye.”
Source: Thanks smh.com