DEBUNKING THE CRASH MYTH

* Ever since 1929, many people have erroneously linked Wall Street market ``crashes'' and ``depressions.''

In 1929, the ``crash'' was followed by the ``depression'' of the 1930s. But economists now recognize that the '29 crash was not the sole cause of the Great Depression. Other causes included frenzied real estate speculation, farm-belt woes, restrictive trade tariffs, wide gaps between rich and poor, and, perhaps most important, the government's tight monetary policies.

The US economy had actually begun to fall several months before the market downturn in 1929. After the market crash, the Federal Reserve - in an effort to shore up the dollar - severely constricted money growth, slamming the brakes on expansion.

In percentage terms, the 1987 market crash was a more severe one-day downturn. But then in late 1987 the stock market turned around, with the Dow Jones industrial average passing its 1987 high in mid-1989. In 1990 the market again fell precipitously, following Iraq's invasion of Kuwait. And once again the market rallied, setting new highs in 1991.

The return on stocks for long periods of time tops that of other financial instruments, including bonds, cash assets, and real estate. In the 1926-93 period, the compound annual return for S&P 500 stocks was 10.3 percent, according to Ibbotson Associates Inc., Chicago. That compares with 5.6 percent for long-term corporate bonds.