An investment adviser tells thousands of clients to sell. The next morning, Wall Street posts what was then the busiest trading day in New York Stock Exchange history.
The advice went out overnight. The orders arrived in the morning.
Joseph Granville was no quiet analyst. The market forecaster published a widely followed newsletter and turned his public appearances into performances.
On Tuesday evening, 6 January 1981, he changed his view of the market. His staff began contacting clients of his early-warning service with an urgent message: sell everything.
The calls continued into the early hours of Wednesday. More than 3,000 clients in the United States and Europe received the warning. Brokers and investors passed it along.
Europe's markets opened first. By the time trading began in New York on Wednesday, 7 January, news of Granville's reversal had spread across Wall Street.
Sell orders piled up. Some stocks were delayed in opening because sellers overwhelmed the available buyers. The quotation tape fell behind trading.
The Dow Jones Industrial Average had closed Tuesday at 1,004.69. On Wednesday it finished at 980.89, a decline of 23.80 points.
New York Stock Exchange volume reached about 92.9 million shares—then a record for a single trading day.
Granville's warning was prominent in contemporary accounts of the sell-off. It clearly helped set off or intensify a rush of orders. But one newsletter writer did not control the entire market.
Interest rates were high, the market had risen sharply over the preceding sessions, and analysts at the time disagreed about how much of the decline would have occurred without his call. One contemporary observer said a retreat was already likely but that Granville's advisory gave it extra force.
There is no need to credit him with every falling share price to see the peculiar mechanism.
A forecaster warned a large audience that stocks were about to fall. Enough investors acted on that warning to help make the trading day itself part of the forecast.
Granville said sell. Wall Street spent Wednesday doing exactly that—and more trading than it had ever handled in one day before.
One influential forecaster's urgent message spread through his subscriber network overnight, contributing to a wave of selling and a then-record trading day.
Granville predicted a selling wave. His followers helped make it one.