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Have you ever watched children at a theme park as they stagger off a dizzying ride only to shake it off and get back in line? As we said goodbye to the 2007 market year, you may have felt a bit dizzy yourself like a rollercoaster rider staggering off that ride. You may also have had a sense of accomplishment just for surviving the ride. Without a moment to regain our balance we’re right back into 2008 experiencing more twists, turns and loops.

No doubt, 2007 wasn’t easy for investors. The higher highs — the Dow Jones Industrial Average (an unmanaged index of 30 widely held securities) closed at a record high of 14,164.53 points on October 9 — were offset by several heart-stopping falls — for example, dropping 546.02 points, 4.3 percent at the time, on February 27 before recovering to lose “only” 416.02 points on the day.

Nevertheless, in 2007 the Dow rose 6.4 percent, the S&P 500 (an unmanaged index of 500 stocks) was up 3.5 percent and the NASDAQ composite (an unmanaged index of all common stocks listed on the NASDAQ National Stock Market) gained 9.8 percent. Volatile perhaps, but 2007 was a positive year.

Those of us who lived through Black Monday on October 19, 1987 when the Dow Jones (DJIA) lost almost 22 percent in one day, recall trading halts and circuit breakers. These tools came back to mind for the first time in a long while during the past year as the market pendulums swayed.

There are many theories trying to explain why Black Monday happened, but most agree that mass panic caused the crash to escalate. In order to prevent panic selling, mechanisms such as trading curbs and circuit breakers have been built into the market.

Trading halts due to extraordinary market volatility became effective April 15, 1998 when the SEC approved amendments to Rule 80B (Trading Halts Due to Extraordinary Market Volatility) which revised previous halt provisions and the circuit-breaker levels.

Under the previous Rule 80B trigger points (in effect since October 19, 1988) for a market-wide trading halt, a decline of 350 points in the DJIA would halt trading for 30 minutes and a drop of 550 points one hour. These trigger points were hit only once on October 27, 1997, when the DJIA was down 350 at 2:35 p.m. and 550 at 3:30, shutting the market for the remainder of the day.

The trigger levels for a market-wide trading halt were set at 10 percent, 20 percent and 30 percent of the DJIA, calculated at the beginning of each calendar quarter, using the average closing value of the DJIA for the prior month, thereby establishing specific point values for the quarter. Each trigger value is rounded to the nearest 50 points.

The halt for a 10 percent decline would be one hour if it occurred before 2 p.m. and for 30 minutes if it occurred between 2 and 2:30, but would not halt trading at all after 2:30. The halt for a 20 percent decline would be two hours if it occurred before 1 p.m., and between 1 p.m. and 2 p.m. for one hour, and close the market for the rest of the day after 2 p.m. If the market declined by 30 percent, at any time, trading would be halted for the remainder of the day.

Just to keep everything in perspective, the DJIA high on October 19, 1987 was 2164.16 and at the time of this writing the DJIA is at 12,705.96. Do the math and you can see the difference in percentages between then and now.

Subprime mortgages and related credit crunch concerns hammered the markets on a regular basis. The Federal Reserve Open Market Committee, still concerned with inflation, acted three times, easing the fed funds rates by a full point to its current 4.25 percent. The Fed also pumped billions of dollars into the economy to assure liquidity, and was joined by other central banks around the world in doing so.

The price of oil rose dramatically during the year, approaching $100 a barrel for sweet light crude as the year ended (and trading at or above that mark in the first week of the New Year). Observers wondered whether high gasoline prices and a depressed lending situation would finally curb consumer spending, a driving force behind the buoyant economy of the past few years.

What can be expected for 2008, now that we’ve survived the old year? Providing that housing sector problems bottom out, that energy prices don’t climb higher, and the smaller corporate profits don’t cramp the outlook for business investment, Raymond James Chief Economist Scott Brown sees moderate times ahead and fairly slow growth gradually improving in the second half of 2008. The U.S. economy is resilient and despite the obvious land mines lying in wait in some economic sectors, the longer-term prospects remain positive with slowed growth.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.