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The story of Merrill Lynch's survival in the 1962 mini-stock market crash challenges the conventional approach to crisis management by highlighting the importance of proactive investments in new technology. While such investments may not seem valuable in normal circumstances, they can be crucial in times of crisis. In the case of Merrill Lynch, they were the only firm to have a computer that tracked all their trades during the crash. This allowed them to avoid the chaos and confusion that other firms faced when they lost their paper trades in the commotion. This example shows that being prepared for a crisis with advanced technology can provide a significant competitive advantage and can be the difference between success and failure.
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Proactive investments in new technology may not appear valuable until crisis hits, but they can mean the difference between success and failure. Merrill Lynch survived the mini-stock market crash of 1962 as the only firm to have a computer that tracked all their trades. Other firms literally lost their paper trades in the commotion. Beware of powerful heads who make dramatic gestures to influence. In the crash of 1929, Exchange boss Richard Whitney jauntily placed a trade in hopes to boost the market and failed. In 1969, fund manager John Cranley cleared out AT&T's stocks with a large order. This act significantly rallied the market but was unintentional. Major companies serve as bellwethers in the market, then and now. AT&T's stock at $100 a share was the tipping point where the crash of 1962 righted itself. Don't discount the impact of fixed and external influences. The crash of 1962 would have produced a significantly worse impact had it not reach its peak just before Memorial Day 1...
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A favorite read of Bill Gates and Warren Buffett, this book moves beyond the flashy advice of business newbies and provide relevant insights that stan...
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