As a subscriber, I gotta tell ya, the Terrible Tuesday brings back memories.

I had quit Morgan Stanley in July '87 after five years as an analyst and associate in Fixed Income trading. I put my trading account at Morgan -- about $100,000 in cash -- while my girlfriend and I spent three months touring Europe. I had just got back to the U.S. around October 15 and was in the habit of watching CNBC's predecessor, FNN, while I was figuring out what to do with my career.

Since I was still in cash it was with a detached sense of calm that I watched the market puke 100 points the Friday before the crash, then heard the rumors of Fidelity selling in Europe through my friends at Morgan. As Monday closed, I watched the TV coverage with amusement as floor brokers rushed from the NYSE clutching newspapers over their faces as if they had been busted dealing crack or something.

As a guy with some operations training as well as trading experience, I knew that the settlement areas would be hopelessly overwhelmed, that cash positions would be in doubt, and that the bankers who financed dealer inventories would be thinking pretty hard about outstanding credit lines. The market opened down sharply with heavy volume on Tuesday, but then, scariest of all, trading ground to a dead halt by about 10:30 with order imbalances in just about every stock you could mention. Two previous crashes came to mind:

1. The 1929 market crash which was exacerbated by the Federal Reserves decision to tighten credit even as liquidity was being blown away by margin calls in stocks and foreclosures in real estate.

2. The Penn Central commercial paper default in the early '80s which threw the entire short term credit market into disarray and raised the prospect of major US corporations being unable to finance their basic operations.

In the second instance, the Federal reserve called up the banks and said, "Go out there and loan money to whoever needs it - we'll lend you the money if need be to cover shortfalls."

My guess was that the Fed under Alan Greenspan would have as much a sense of history as me, would worry about the lack of liquidity, and would open that Discount Window once again.

So I called the Morgan Stanley employee broker, (I had money at Fidelity as well but I couldn't even get past the busy signals) and bought $10,000 each of the most liquid large cap stocks I could think of (GE, KO, MRK, AXP etc.), prices unknown. I didn't even get notified of the fills until 5:30 in the afternoon, but by that point the market was already on the road to recovery. By midmorning on Wednesday, my account equity was up about $40,000 and I called back and closed out the positions. I then stayed in cash until about February 1988 when the aftershocks had finally died down.

It was a once in a lifetime, never to be repeated trade - kids, don't try this at home.

-- David Edwards, President, Heron Capital Management, Inc. (received 10/9/97)

Jim Cramer responds: Fabulous recollection. Thanks!!! jjc