Art Cashin On Friday The 13th And Wall Street
Art Cashin goes through the history of Friday the 13th on Wall Street, and tells us it has a slight upward bias, being "up 55% to 60% of the time." Just don't tell that to Europe today, and especially Spain and Italian banks, both of which are getting monkeyhammered at this moment.
From UBS Financial Markets
Of Friday The Thirteenth And The Last Official “Hat Day” - It’s Friday the 13th and all of the negative myths surrounding it pop up. Friday the 13th actually has a mild upward bias in stock market history. It’s up 55% to 60% of the time.
We think the negative myth may be based on a novel published back around 1910. It told of a plot by an evil stock trader (ain’t they all) to crash the market on Friday the 13th.
By a numerical oddity, the 13th of the month falls on a Friday more than any other day. In the last 400 years, we have had 688 Friday the Thirteenths.
This year is especially symmetrical. Today is the second of three Friday 13ths. There was January 13; today and July 13th. Those dates are exactly 13 weeks apart.
One further note on Friday the 13th. Triskaidekaphobia is actually fear of the number 13. Fear of Friday the 13th is actually Friggatriskaidekaphobia but that sounds like something that would cause your mom to put a bar of Lifebuoy in your mouth. So, Dr. Donald Dossey coined the term paraskevidekatriaphobia. He says that by the time you manage to pronounce it, your phobia’s gone.
Prior to 1988, floor brokers used to have fun with the myth by declaring Friday the 13th “Hat Day”. Brokers would don silly and bizarre headgear, pretending to ward off the evil spirits.
The last official “Hat Day” occurred in 1987. It was on Friday, November 13th, to be exact. A few weeks earlier on Monday, October 19th, U.S. stock markets had suffered their worst selloff in history. The Dow fell 20% in one day. That would be the equivalent of a 2,500 point selloff today. The ’87 crash was far, far worse than the ’29 crash on a percentage basis. As that day wore on and prices continued to fall and fall, the floor took on a kind of surreal atmosphere, almost like a dream sequence in a movie. You bargained and fought for good prices but there was a sense that this was unreal – that this couldn’t really be happening.
In the days and weeks that followed the crash, traders and others sorted through the financial carnage, sometimes with disastrous results. A lost ticket might be a career ender. A misread price could produce a loss that could cost you the price of a small house or certainly a very expensive auto. Several friends would hug and cry and say goodbye – the only valuable they still owned were their memories.
By the end of the first week in November, after some contested rulings were appealed, the floor pretty well knew who had survived. That’s when it was suggested that Hat Day should be a kind of “Survivors Ball”. The visitor’s gallery had been closed after the crash to avoid distractions while we sorted through the financial debris. We prevailed upon the PR department to cancel press passes for the day. On Hat Day, it would be just us – the survivors – in the place where we had been challenged and survived.
The opening bell set the stage. On to the podium strode the NYSE Chairman, the Vice-Chairman and the President. All three were decked out in over-sized sombreros, the kind seen in “The Three Amigos”. On the floor before them scurried brokers and clerks wearing top hats and helmets and lady’s bonnets and caps that had ducks or dogs growing out of them. It was perfectly ridiculous and just the right antidote to weeks of worry, fear and loss of comrades. Smiles spread spontaneously and soon did laughter. Trading continued, of course. Trades were made, face to face, as they had been for over 100 years. Based just on your word – no exchange of contracts, no lawyer, no accountant, no notary – just your word is your bond.
The atmosphere continued to brighten. Spontaneous “parades” broke out. Particularly unusual or ugly head gear might bring cheers or whistles. Hats were swapped to see who looked sillier in what. The Survivors Ball was in full swing and having all the desired therapeutic effect.
But, it turned out, not everyone present was a survivor. An unaffiliated reporter, or stringer, had been admitted to the floor. He had asked permission to interview a certain specialist who had made such a good market in his stocks during the crash that he put himself and his firm out of business. Late in the trading day on October 19th he received a call from his banker that he had used up every penny of his assets trying to stem the plunge of his assigned stocks including a prominent Dow name. The specialist, a noted Marine veteran, was forced to sell his firm that very evening. (Ironically, a few month’s later, it was discovered that the bank had miscalculated. The sale had not been necessary.)
At any rate, the stringer stood at the specialist post in the Blue Room (one of the three trading rooms at the time). He interviewed the specialist about the crash and took lots of notes. He also asked lots of questions about the hats and the light-hearted shenanigans going on about him.
A few months later, perhaps looking for another story to sell, he sent an article about that day to a west coast newspaper. They published it under a title something like “The Fat Cats in the Hats”. It was not complimentary.
Several months after that it may have been resold to an east coast newspaper. They published it in their Sunday magazine section. The title was changed but the tone remained the same. By now virtually no one still remembered that President Reagan had written a note to the men and women on the floor of the NYSE, thanking them for their courage and dedication during the crash. But with the letter and even the crash now just a memory, no one would understand the need for a Survivor’s Ball. Without that, the article just made the floor look silly.
That was the last “Hat Day” on the NYSE.
Without “Hat Day”, there were occasional “bumps”. On Friday, October 19th in 1989, the attempted leveraged buyout of United Airlines (UAL) suddenly collapsed and the Dow plunged 190 points (a bit more than 1000 points, today). It was a scare but not enough to reinstate a rather harmless and fun tradition.