Stocks got slammed, but was it a `crash'?

[October 11, 2008]  NEW YORK (AP) -- Did stocks "crash"?

Some news organizations and investors are hesitating to use the word to describe Wall Street's terrifying sell-off.

A crash is commonly defined as a 20 percent decline in a single day or several days. The drop over the seven days ending Thursday lopped 20.9 percent off the Dow Jones industrial average, which would qualify as a crash. On Friday, the Dow fell again, bringing the cumulative loss to 22 percent.

"This quick, this amount, in these few days, obviously is a crash," said Howard Silverblatt, senior index analyst at Standard & Poor's. "The crash deals with the speed as well as the intensity of it."

CNBC host Dylan Ratigan was among those uttering the word on Thursday, calling the decline "a cascading crash." The Wall Street Journal, the most influential publication in the financial world, hedged somewhat on Friday's front page, saying the scary drop over the past several days "amounts to a slow-motion crash."

But not everyone was prepared to go that far.

The Associated Press did not use the word "crash," referring to Thursday as a "runaway train of a sell-off."

"A car crash is sudden, and this is over eight days," said AP Business Editor Hal Ritter. "You can argue either way, but it's better to give readers the important numbers for this week, 1987 and 1929, so they have the perspective to make their own judgments."

While The New York Times' news columns called Thursday's trading a "rout" in which "panicky investors dumped stocks en masse" in a "stomach-churning 90 minutes" at the end of trading, the paper carefully avoided the word "crash," saying the 20.8 percent decline over six trading days "is similar to the drop in the Dow on Black Monday, Oct. 19, 1987." (And that, of course, is a day most people refer to as a crash.)

Times business editor Lawrence Ingrassia was not available for an interview, said newspaper spokeswoman Catherine Mathis. But she said, "What I can tell you is that we compared the percentage decline with the 1987 crash, which gives readers the perspective they need on the extent and speed of the decline."

One reason news organizations and investors hesitate to use the word: They are afraid of causing panic.

"Nobody wants to be blamed for making things worse than they are," said Edward Yardeni, who runs his own economic research firm. "You can probably watch CNBC all day and find that almost no one used the word `crash' or `depression.' You'll see it more often. It is a stock market crash and it has the potential to create a depression."

The word "crash" is so linked to the market's 1929 plunge and the images of bread lines, shantytowns and hungry children in the ensuing Great Depression that some investors hesitate to use it even to describe 1929.

Seth Glickenhaus, a 94-year-old money manager who worked on Wall Street in 1929, used the euphemism "break" to describe the 1929 crash in a recent interview with the Journal.

At CNBC, the closely watched anchor Maria Bartiromo asked a guest Thursday, "I'm reluctant to use the word, but do you think this is a crash?"

Her guest, Bob Doll, chief investment officer of BlackRock Inc., the largest publicly traded U.S. money manager, replied: "Yeah, I guess we have to call it that, Maria. That's a lot of percents in a short period of time. We're down a bunch, and it's been relentless."

Jonathan Wald, senior vice president for business news at CNBC, said in an interview Friday, "Anytime you do the math, when the Dow is down that much over a period of days, it's a crash. It's a word we don't like to use very often because nobody likes to see it, but when it happens, you can't avoid it."

On the morning after Black Monday in 1987, the Journal shocked many readers when it boldly used the word. Its lead article began: "The stock market crashed today."

A Journal spokesman did not immediately return calls Friday.

On Friday, the Dow lost 138 points, ending its worst week ever in both point and percentage terms. It has now lost just under 2,400 points over the last eight trading days, its longest losing streak since the aftermath of the Sept. 11 terrorist attacks. The index began October at 10,850 and ended this week at 8,451.

[Associated Press; By ELLEN SIMON]

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