The Earth Trembled, but the Street Held Firm," Barra Newsletter, October 1990, p1.
categories: Investing (Investment Management), PMA, Equities, Research Paper, FREEMAN John, general
Predictions of economic disaster for the San Francisco Bay Area followed close upon the heels of last year's Loma Prieta earthquake. Businesses would be hobbled by transportation bottlenecks, loss of plant and equipment, and a stunned labor force. Sensational media coverage of the destruction in Santa Cruz, the fire in San Francisco, and the demolished Cypress Street freeway structure in Oakland only reinforced this bleak prognosis. Many expected Wall Street to rush out even as the Red Cross, Dan Quayle and Dan Rather rushed in. Barra's analysis shows otherwise. The stocks of locally based firms actually outperformed a comparable national index in the last year. The relatively strong performance of the Bay Area portfolio is a pleasant suprise. Those looking for evidence of event risk in the equity market won't find much here. Investors who resisted a knee-jerk reaction to dump Bay Area stocks after the earthquake were rewarded for their fortitude.