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When the bull was a babe
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April 3, 1998: 2:18 p.m. ET
Few took stocks seriously in 1982, when the Dow's 16-year 9,000 run began
From Correspondent Allan Dodds Frank
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NEW YORK (CNNfn) - When the great bull market began 8,000 points and 16 years ago, Ronald Reagan was president and the Berlin Wall was still standing. The U.S. savings and loan industry was beginning to crumble from the effects of high interest rates, and OPEC still had an iron grip on world oil prices.
Against that backdrop, the New York Stock Exchange dominated Wall Street even though the Dow Jones industrial average was hovering around 1,000 after more than a decade of lackluster performance.
"In 1982, a question that was often asked was, 'How can you possibly invest in stocks if you can earn 15 or 16 or 17 percent in a bank CD, and it's guaranteed, it's insured, there's no risk attached to it? Why bother with stocks?' " said Arnold Kauffman, publisher of Standard & Poors' Outlook. "And 15, 16 years later, people are saying, 'How can you possibly buy a CD at 5 percent? You have to put your money in stocks.' "
Back in 1982, the 1,526 companies on the Big Board traded an average of 65 million shares daily. The American Stock Exchange, home to 945 companies too small for the NYSE, handled just 1.3 million shares daily. Nasdaq was an over-the-counter market for 3,264 companies which traded 33 million shares a day despite the lack of reliable real-time prices that forced investors to work exclusively with bid and ask prices.
The Big Board's market capitalization was $1.3 trillion, while the AMEX rang in at $60 billion and Nasdaq hovered at around $160 billion, about three-quarters of the 1998 market capitalization of Microsoft (MSFT) alone.
The computer age pumped the Nasdaq as Microsoft, Intel (INTC) and many other "small" high-tech companies that started there stayed loyal to the market as they grew into industrial giants.
Computerization also helped make stocks more attractive -- and exciting -- than passbook savings accounts to the personal investor.
"What's really happened is technology has basically favored capital markets over depository institutions because it has reduced the cost of making transactions," explained Bill Dudley, chief U.S. economist at Goldman Sachs.
Computers also encouraged hordes of investors suddenly interested in stocks as the result of individual retirement accounts and 401(k) plans by making information more easily accessible.
"With computers nowadays and the Internet, the average investor can be a financial genius," said Yale Hirsch, publisher of The Stock Traders Almanac. "You now have databases . . . which put you on a par with the top money managers."
In the 16 years of the bull market, the value of stocks on the New York Stock Exchange has increased nearly tenfold. On the Nasdaq, stock values have jumped twelvefold, but the Amex has not even managed to triple its value.
Amex's failure to attract the companies that became giants in the 1990s left it a financial backwater of sorts, trapped between the Nasdaq and the Big Board until its absorptionby Nasdaq last month. 
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