A Whiff off Panic

But Wall Street has the last laugh

For a brief period last week it looked ominously as if the bottom were about to drop out of stock markets around the world. But looming doom proved a sucker's bet. In one of the dizziest roller-coaster rides of recent times, stock markets in Tokyo, London, New York and elsewhere slumped and surged and careered wildly down and up. Yet when the dust settled, share prices in most cases were pretty much back to where they were before the week began, and in New York, they were up substantially. The Dow Jones industrial average of 30 of Wall Street's leading blue-chip stocks ended the week at 860.73, a 37-point rise over the previous Friday closing.

For dazed investors and exhausted brokers, the market's gyrations were ultimately reassuring proof that the world economy is not teetering on the, brink of collapse, as a minority of economic Cassandras have been insisting. The unwillingness of the markets to stampede into a state of panic was also a major failure for self-styled Investment Expert Joseph Granville of Holly Hill, Fla. The stock market hip shooter, whose forecasts have been wrong as often as right, has over the years gained a large and loyal following among investors who subscribe to his weekly market newsletter and hang on his words as if he were the Vicar of Value.

Seventeen months ago, Granville led the lemmings of Wall Street into a 30-point gain in a single day with an order to buy stocks. Then in January he set off a 23.80-point drop in one trading day with the command "sell everything." Even though stocks continued generally up for nearly five months after that before they started their current down phase, Granville insisted that he had the magic formula for Wall Street.

Two weeks ago, Granville, who believes that the world is in a bear market that "won't bottom until at least the middle of 1982," took his side show to international markets. And, with his usual dramatic flair, he decreed in advance that last Monday would be "Blue Monday," when stocks would drop sharply around the globe.

That was like screaming "fire!" in a burning building. Investors have been nervous for months, as they watched Wall Street's Dow Jones industrial average fall about 200 points from its peak of 1024.05 on April 27 this year. Moneymen have grown more and more skeptical of the Reagan Administration's supply-side economic policies and have begun fearing that they might lead to a synchronized global slump. Meanwhile, high interest rates in the U.S. have forced up the cost of money in other countries and raised even more concerns about future economic growth. Stocks in London, for example, have been depressed since early in September, when many of Britain's largest banks pushed up interest rates another two points to 14%. Said David Oldham of Wedd, Durkacher: "The market was on a downward path anyway due to high interest rates. The flamboyant statements made by Granville simply gave it a kick in the seat of the pants on the way down." Issues traded on the Paris stock exchange have moved uncertainly since before the May election of Socialist President François Mitterrand, who has a program calling for wholesale nationalization of French banks and industries.