When the bull market finally ends, which it must, it certainly doesn't have to be in calamity. Just a lot of selling, most likely hinged to a downturn in the economy. But it's worth noting that even with all the adjustments since the '87 crash, another meltdown is quite possible. And that hasn't been lost on a number of institutions quietly preparing for the worst. Some of the nation's largest mutual-fund companies, like Vanguard and Fidelity, have detailed battle plans should the market fall apart.
Brokerage firms seem less frenetic but no less prepared, as is the government.
Maybe these parties aren't as sanguine about the markets as they would have us believe. In government, the President's Working Group on Financial Markets, formed after the '87 crash, still meets every six weeks for an hour or so to discuss things like bank failures and stock-market crashes. The group is chaired by Treasury Secretary Robert Rubin and includes Federal Reserve Chairman Alan Greenspan, as well the heads of the Securities and Exchange Commission, the Commodity Futures Trading Commission and others. Early last week Rubin was asked if he believed stock prices were too high. What is known, though, is that the group is especially concerned about the potential for outflows from mutual funds, which have become swollen with individual's deposits this decade.