ion, and the public got involved in the stampede.
Although investment professionals looked upon the public’s lack of un-
derstanding for the investment process with contempt, they failed to recog-
nize the crucial element of similarity they shared with them. The public
merely accepted the fact that the Dow going up was good and its going down
was bad. It was exactly the same for the traders, who thought they really
understood the system. The investment professionals knew far more about
the mechanics of the market but had lost track of the foundation of its value.
For them, as for the public, reality had become trends, and they often ex-
pressed their bets by use of derivatives, which were moving numerical in-
dicators that over the years had become increasingly disconnected from
what the individual stock designations truly represented. Stock certificates
were not, after all, theoretical expressions, but individual segments of own-
ership in corporations that had a physical reality. Over time the “rocket sci-
entists” on the floor of this room had forgotten that, and even schooled as
they were in mathematical models and trend analysis, the underlying value
of that which they traded was foreign to them-the facts had become more
theoretical than the theory that was now breaking down before their eyes.
Denied a foundation in what they were doing, lacking an anchor on which to
hold fast in the storm sweeping across the room and the whole financial sys-
tem, they simply did not know what to do, and the few supervisory personnel
who did lacked the numbers and the time with which to settle their young
traders down.
None of this really made sense at all. The dollar should have been strong
and should grow stronger after a few minor rumbles. Citibank had just
turned in a good if not spectacular earnings statement, and Chemical Bank
was fundamentally healthy as well after some management restructuring,
but the stocks on both issues had dropped hard and fast. The computer pro-
grams said that the combination of factors meant something very bad, and
the expert systems were never wrong, were they? Their foundation was his-
torically precise, and they saw into the future better than people could. The
technical traders believed the models despite the fact thiil they