There is no evidence that, despite 44-year-old Mark Barton's apparent share trading losses, the massacre and subsequent suicide he perpetrated last week was anything other than the work of a lunatic. Yet some economists are convinced, it was a potential sign of the crash of 1999, which in turn will precipitate the recession of the year 2000.
Ed Yardeni, chief economist at Deutsche Bank Securities in New York, is a leading bear. He predicts a 30 per cent market correction, followed by a recession lasting a year to 18 months, which will trigger deflation in most of Europe.
He believes the American public has over-gorged itself on equities which are now at unsustainable levels, given the risks of higher interests. Unlike 1929, where only a minority were caught up in the speculation, everyone has an equity retirement plan, which many manage themselves, often through online brokers.
Trading volumes are in sharp decline. Once panic sets in, these armchair investors will start selling as fast as they were once buying.
Ed Yardeni says: "Markets are priced for perfection. The view is there is no recession coming. The Asian crisis is behind us. Last year's fears of deflation have gone. There is no risk to the bull market of creeping interest rates or a small rise in inflation.
"But I think there is room for a contrary analysis which says that in human history things rarely go swimmingly, especially when you expect them to." The catalyst for change in sentiment, in his view, is the Year 2000 computer problem. For him it is closely analogous to the oil crisis of the mid-1970s, which sparked a global recession.
He says: "Information, like oil, is a vital resource for our economies, and although the problems are widely recognised, there is a great deal of complacency. Not everything in the whole world will be sorted in time. This could well lead to an information gridlock, and a credit crunch, as banks become fearful of their customers' ability to make payments. Economic activity will turn down as a result."
This view is supported by a warning this week from the government-backed Action 2000 that millions of jobs and billions of pounds could be lost to the UK economy alone, through the apathy of small and medium-sized businesses. And Mr Yardeni is far from being the only financial expert who sees dangers looming in share prices.
US investment bank Merrill Lynch this week began selling stock, from fears that higher interest rates would send global markets reeling.
And in the UK, though not quite so gloomy, a number of investment managers are hanging on to their cash. Justin Urquhart-Stewart, at Barclays Stockbrokers, believes we are headed for a typical "autumn season of storm", when those with cash will be able to pick up bargains. Standard Life's global strategist, Ken Forman, also sees a credit crunch on its way and he is concerned about the high levels of debt in the US and Japan.
He says: "If you want to borrow short-term money over the new year, the rates are already sky high. Institutions will become more reluctant to lend to each other, leading to a squeeze. We already know that there are four financial institutions which are at risk. But the fear is many more will default on debts, perhaps even because their local electricity company fails."
Institutions are already planning for a consumer panic in the weeks leading up to the millennium with a run on deposits. The Royal Mint is printing excess notes and coins to cope with massive cash withdrawals from customers who fear their bank may foul up. Sales of safes, at least are expected to boom, as they have lately in Japan, where confidence in the banking system has been shattered.
But for David Rough, Legal & General's investment director it is the gap between the earnings yield on equities and bonds, currently at historically unsustainable levels, which poses the real risk. He says share prices need to fall.
"The bulls say that we have reached a new paradigm and shares are now valued for themselves rather than for their potential earnings," he says. "Well, we've never been there yet."
So how can you protect yourself from a crash? The truth is you can't. The professionals are always caught out, so an amateur investor can't hope to outsmart a downturn.
But it might make sense to start taking profits now, if you have some shares which have climbed spectacularly. But don't liquidate your entire portfolio, because it might never happen, and it will be even more expensive to buy in again.
Then, you just have to grit your teeth and hold on tight. Share prices recovered fairly quickly after both the 1929 and 1987 crash. Unfortunately, most small investors lost out by selling at the bottom each time.
And remember this isn't Armageddon, as Ed Yardeni himself is eager to point out. He says: "They call me a prophet of doom because I say there's not just a bump in the road there is a great big hole and we're heading straight for it.
"But, so what if markets fall by 30 per cent and we go into recession for a year? This isn't Armageddon, this isn't Doomsday. As long as capitalism survives, the markets will come back again."
REASONS TO BE CHEERFUL
SHARE PRICES are at giddy heights, but there are key differences with previous crashes:
l Interest rates are at historic lows
l Debt levels are high in the US, but so are earnings. Consumer borrowing is not at historic peaks, and is more subdued in Europe
l Work insecurity keeps consumers cautious, less ready to spend, borrow and invest
l The house-price boom in England is confined to hot spots
l Germany and Japan show signs of economic reawakening
l The Year 2000 chaos theory may just be a "silly season" scare story, which fails to materialiseReuse content