KEY POINTS:
Sir Bob Jones who watched his personal fortune diminish $160 million on the day the sharemarket crashed 20 years ago, at the time described the day's tumultuous trading as "exhilarating" -- watching history in the making.
The property magnate told reporters he "giggled a bit" but believed nothing had changed despite saying he was watching history being made.
He said his company had a "holocaust game plan" for such an eventuality that saw the share index plummet 15 per cent in the wake of Wall Street's plunge of 22 per cent on Black Monday.
"We're laughing. But I feel sorry for some of the victims out there," Sir Bob told The Dominion newspaper then.
But things did change and it proved not quite the laugh he forecast.
At the end of the week, when the gloom had set in after Wednesday's "dead cat bounce", Sir Bob declared he would help restore confidence with a "series of announcements" including the largest property transaction in southern hemisphere history.
The then prime minister David Lange made the $400m announcement but none of the deals were ultimately consummated as no developer could fulfil their obligation.
Sir Bob praised the media for its "responsibility" -- for giving prominence to commentators who said the market had been oversold -- possibly a damning comment on the media which in retrospect underplayed events.
The sharemarket went into long-term decline that saw it lose two thirds of its value by 1991. Shareholders lost billions of dollars.
Today, the market is still 10 per cent below the 1987 level despite New Zealand experiencing one of the strongest economic growth spurts in its history over the last decade.
Sir Bob, whose listed vehicle Robt Jones Investments (RBI) was capitalised at $1.3 billion pre-crash, today described the crash as "a dramatic and unexpected event" but not comparable to the "spectacular horror" of the September 11, 2001 twin towers shock.
"The market crash at the time seemed irrational and I found the hysteria amusing," he wrote to NZPA in an email.
"I made and lost a great deal of money but was philosophical about that," he wrote.
RJI attracted a special breed of shareholder. Its annual meetings attracted thousands and the atmosphere was like a religious revivalist meeting or a political rally.
The company took time to fall. In its 1989 half yearly report, it published two lists detailing the pre and post-crash position of the 43 listed property companies. Three were already defunct, 14 were in receivership and five taken over. Their combined market capitalisation had fallen from $5.8 billion to $1.3 billion.
Even though RJI had lost 41 per cent of its value, it boasted it was the only one to prosper as it was 10 times the value of the next largest player.
"We are on target for another record year... shareholders can confidently anticipate further growth...," the company said.
Within 18 months it joined the others on its knees and although it avoided total collapse, its shares joined the penny-dreadful class.
Sir Bob describes the pre-crash environment in 1980s as "glorious times of optimism and excitement after the stultifying preceding years".
"There's been a great deal of hyperbole about that period.
"The salient mistake lay in the public fervour which brought irrational share-prices.
"It's an age-old phenomenon and will hopefully always periodically occur, otherwise humans would be robotic unemotional zombies."
The critical lesson he learnt was to have no public dealings.
"When things go well you're a hero; when things change you're a crook.
"It's the same with politics, sport and any activity involving public support."
Sir Bob does not believe those who led companies that crashed should have been jailed on fraud charges as Equiticorp boss Allan Hawkins was.
"After crashes the public, fuelled by the media, look for culprits."
He said the prosecution of Mr Hawkins, was simply a game that the Serious Fraud Squad struggled to justify.
" 'Let's get someone', was a strong public sentiment at the time and he became the fall-guy over a technicality which gave him no personal gain."
His personal net wealth pre-crash was $660m, mainly in RJI.
"I treated it as a joke, after all one hardly needs that much."
Since his disengagement from RJI, he has restricted his property activities, preferring travel and book writing.
But like many of the crash survivors, Sir Bob not only has survived, but has thrived and remains on the Rich List.
He estimates the properties in his personal company, Robt. Jones Holdings, to be worth $700m and his personal net worth at about $350m.
"Ignore the NBR Rich List which put me in at $200 million three years ago and during the subsequent biggest three year boom in property values in my 45 years involvement, with rents doubling and yields dropping, they've kept me at $200m."
He's now sizing up European markets, particularly in eastern Europe, "mainly for the fun of it".
- NZPA
