Our market, stock market can react quite differently
Gary Evans, Business editor -- Furniture Today, November 18, 2001
Since Sept. 11, we've seen the already scary stock market inch down. But take heart! If historical precedent means anything, it'll be up sometime in the spring. And more than likely, it'll be up in the double digits.
Stock fanatics know this. They know that, from the fall of France in 1940 to the Asian stock market debacle in 1997, crises tend to send the Dow down, sometimes precipitously, but there's a rebound within three to six months.
In 20 crises in the last three decades, the market fell 18 times. During the financial panic of October 1987, the Dow fell 34.2%. The market was back up in six months, but it took a while longer to recover the full loss.
Interestingly, six of those 20 crises occurred just before or during furniture markets (a seventh, the Arab oil embargo in 1973, was before Furniture/Today's launch). And how did the markets do? Four of them were good, including the latest; one was described as "thin" and one was "flat."
The Falkland Island War in April 1982 hardly caused a blip in the stock market but may have affected the furniture market. Furniture/Today reported that buyers lacked confidence. "Manufacturers tallying commitments found them to be thin," the paper said.
When the United States invaded Grenada in October 1983, stocks fell about 3%. And furniture orders were flat. That surprised vendors, who were primed to do big things. After all, stocks had just broken the 1,000 mark. Interest rates were falling and the economy was on the way to recovery. Things seemed good. So go figure.
When the United States bombed Libya in April 1986, the Dow went up 2.6%. The furniture market did a lot better. One major manufacturer was quoted as saying his company was 8% or 9% ahead of the year before, which Furniture/ Today said was "typical of most exhibitors."
The financial panic of 1987 set in on Oct. 2, giving the industry time before market to digest the 34% decline in the Dow. "State of the economy a question mark as industry gathers," read a Furniture/Today headline. "Jitters in the (stock) market, a further rise in interest rates, and spotty retail business" were all precursors to what was expected to be a bad market. But by the third day, stories were sounding a different tune. "The bad news from Wall Street had no effect on buying decisions," the paper said. The wrapup headline read, "Strong commitments keynote market action."
Likewise, buyers ignored the Asian stock market crisis in October 1997, when the Dow dropped 12.4%. "The Labor Day turnaround saved the day, rallying retailer moods and appetites to buy," said Furniture/Today, adding that "solid business at market left many manufacturers energized about this fall and prospects for 1998."
Although everyone was poised for the worst at the recent market, it turned out to be pretty good, even with attendance off a fourth to a third. Think what might have been had everybody come to High Point. You just never know.
Opinion columns are available online atwww.furnituretoday.com.
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