The mid-1980s bull market was driven by liberalization and leveraged buyouts
Evidence
The events of September 1986 were followed by another sharp decline on January 23, 1987, but those falls seemed minor reversals in a prolonged international bull market that saw the S&P 500 index almost triple between 1982 and September 1987, with a similar rise in London and an even greater rise in Tokyo. The demons of the 1970s high inflation, oil shocks, bitter labor disputes, stagnation seemed to be receding, banished by liberalized markets, monetarism, Reaganism, Thatcherism, and by the vogue for aggressive financial management, exemplified by the audacious acquisitions of big, staid corporations by raiders with good access to the market in “junk” (lowerthan-investment-grade) bonds. — Donald MacKenzie, An Engine, Not a Camera, 816
Categorization
- XREF: The leverage/buyout boom here is the same financialization context that Black-Scholes arbitrage and portfolio insurance operated within — supports the book’s wider thesis. — connects to: Hostile takeovers in the 1980s drove the financialization of corporations — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 49; Hostile-takeover markets and Reagan politics, not finance theory, drove 1980s financialization — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1175; Private equity is a rebranded form of the 1980s leveraged buyout — Andrew deWaard, Derivative Media: How Wall Street…, 492 (+2 more)
Broader Connections
- Hostile-takeover markets and Reagan politics, not finance theory, drove 1980s financialization
#qualifies(0.85) — Donald MacKenzie, An Engine, Not a Camera, 1175 - Private equity is a rebranded form of the 1980s leveraged buyout
#expands(0.80) — Andrew deWaard, Derivative Media, 492 - Financialization accelerated through 1970s-80s deregulation and state support
#corroborates(0.78) — Andrew deWaard, Derivative Media, 488 - Takeover markets and institutional investors drove shareholder-value restructuring of corporations.
#qualifies(0.78) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 31