A lot can happen in a year

Allan Sloan is a senior editor-at-large at Fortune

TEXT OF INTERVIEW

Scott Jagow: It's really hard to believe that one year ago, the Dow was above 14,000. Time to visit with Fortune Magazine's Allan Sloan. I know, Allan, I remember us talking about that last October.

Allan Sloan Back a year ago, when the Dow was setting its all-time record, I'm sitting around saying, "I don't get it, I don't understand." A lot of the dimensions of the subprime problem, which has now turned into a cancer in the financial system, I mean that stuff was out there, and I couldn't understand why the market was so high. The other thing I can't understand is why I didn't sell everything. And I think it's because I didn't listen to myself, but then again I rarely do.

Jagow: Well hindsight . . . you know.

Sloan: Hahaha. It's beyond belief. I actually even have some statistics showing how much the broad U.S. stock market lost in the year between October 9, 2007 and last Thursday. Do you want to know what the number is in trillions?

Jagow: I don't know, but give it to me anyway.

Sloan: According to the Wilshire people, it was $8.3 trillion, or 42 percent. It's not been a very good year. I saw problems . . . I saw nothing like this coming.

Jagow: But what exactly is going on right now? Because the bailout passed, and it can't just be financial stocks, because these indexes have lots of different companies on them.

Sloan: Right, I think it's total panic. Anybody who had borrowed money, had bought stocks on margin, is getting margin calls. A lot of hedge funds, at least in the U.S., had a lot of redemptions as of October 1, and they may be selling at any price to get money to redeem the investors who want to leave. And a couple of times during that ghastly week, I sort of stuck my head up, threw a little money into a few selected issues, which is what you're supposed to, and got just totally stopped to the point where Thursday night, I just decided I didn't want to look at my stocks anymore. I don't know -- you know, if I were a betting man, I'd say the market would not go much lower than it is. But I'm offering you no guarantees or warranties.

Jagow: But it does seem there's got to be a lot of buyers out there ready to pounce.

Sloan: There have to be. I mean, I'm a buyer getting ready to pounce. This can't go on like this -- any individual stock would go to zero. The market will not go to zero. I mean, it just won't.

Jagow: All right, Allan Sloan from Fortune Magazine. Thank you.

Sloan: My pleasure.

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