TSC Weekender: Riding the Big Bad Wave

THE PULSE Where TSC feels the market's beat. MORE THE TRADER'S TONGUE JJC translates Street-speak. MORE

It's weeks like these that make old-timers nostalgic for the days when everybody remembered October '87. Whether you do or whether you don't, TSC was there this week riding that big bad wave we call the market. Now for something -- if not completely different -- then complementary to the analysis and news of the week. Saturday, after five days of you-are-there columns, Jim Cramer returns to the Cutting Room. Also on Saturday, personal finance takes over and helps make sense of the week. And Sunday TSC columnist Christopher Edmonds talks to Sam Zell, the guru of real estate investment trusts. Zell's real estate career transcends recent trends -- spanning the REITs of the early 1970s to limited partnerships to today's REITs. It makes the new guys look pretty green.

I Go Crazy

The market had a psychotic break on Tuesday, not that you could really tell by the rest of the week.

The week began inauspiciously with Judge Thomas Penfield Jackson's ruling that Microsoft (MSFT) had violated U.S. antitrust laws. Shares of Bill's outfit staggered 15% in advance of the ruling, which came after the close. (See our index page for a full roundup of Microsoft antitrust coverage.)

Then Tuesday came and the market cracked up. The Nasdaq slid as much as 13.6% at one point -- nearly 575 points. Now that tech stocks "have become the national plaything," as one analyst told TSC earlier in the week, many investors were caught with their diversification down.

With more and more investors buying stocks on margin (in effect borrowing from their broker to buy stock), margin calls are suspected of contributing to the severe declines. (Most brokers will lend customers money to pay for up to 50% of a stock's value. But when the value of the stock falls to a certain level, brokers tell customers to put up cash or securities to keep the borrowed funds at about 30%.) At day's end, however, the Dow and Nasdaq got a grip and posted modest losses. The Nasdaq closed down a relatively tame 74.79, or 1.8%, to 4148.89. (Learn more about margin calls and what happened here.)



The rest of the week, the indices inched up. A benign jobs report on Friday sent out good vibes, and on the relatively light day ahead of earnings, traders seemed to experience amnesia. Those who were around stampeded into tech stocks, lifting the Nasdaq 178.89 to finish at 4446.45.

Kayte VanScoy, special to TheStreet.com, contributed to this piece.

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