BusinessWeek – What did investors do when the Dow Jones industrial average plunged 777.68 points, or 7%, on Sept. 29, to 10,365.45? Head for the nearest bar for a double? Or rush to double up, or down, on their stocks?

Either way, the Dow’s sharp response to the unexpected rejection by the House of Representatives of the Treasury’s buyout plan reminded investors yet again of how unpredictable and volatile the market can be.

"You’ve got to have a steel stomach to confront these types of markets—to survive or win," says William Harnisch, president of hedge fund Peconic Partners, which manages some $1.5 billion in assets. And a winner he’s been at a time when most other hedge funds are struggling to avoid sinking. In 2007, Peconic posted a 64% gain, and this year is up 8% though Sept. 29, vs. a decline of more than 20% for the Standard & Poor’s 500-stock index. So Harnisch wasn’t one of those who scurried to the nearest tavern: He dared to buy stocks as the market plummeted.

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Bloomberg.com: UK & Ireland – “I’ve never lived through something like that,” Stephen Jarislowsky, the 83-year-old chairman and founder of Montreal-based money manager Jarislowsky Fraser Ltd., said yesterday about the past month on Wall Street.

“I don’t even think the ’30s were like that,” he said in a telephone interview. “At least they had a bank holiday and they closed all the banks. These idiots in Washington didn’t do that.”

On the worst day in global financial markets in 21 years, investors who have seen it all were left shaken. After the U.S. House of Representatives voted down a $700 billion rescue package supported by President George W. Bush and leaders of both parties, $1.2 trillion of market value was erased from U.S. stocks.

“I’m more than worried,” said Jarislowsky, who co-founded his firm in 1955 and oversees C$51 billion ($49 billion). “In a market like this, I’m not looking at opportunity. I am looking at preservation of capital. If governments aren’t careful and this mess isn’t solved fast, capitalism as we know will be wiped out.”

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