BOCA RATON, FLA -- Remember the stock market crash of Oct. 19, 1987? The Dow dropped 508 points, setting off a panic on Wall Street and creating a $1 trillion paper loss. Although many stocks climbed back up -- and went even higher during the next several years -- Oct. 19 was a day that most investors will never forget.

But what about the bond market crash that began last Feb. 4? It hasn't been nearly as dramatic but, in its own glacial way, it has been just as damaging as the 1987 stock market crash. From January to mid-November, the bond market lost $1 trillion in market value, according to the Securities Industry Association.

Feb. 4, of course, was the day the Federal Reserve raised interest rates for the first time in five years. The Fed has now raised rates six times and may do so again, if it sees signs that inflation is heating up.

As interest rates rise, of course, bond prices fall. No investor will pay full price for an older bond paying 6 percent interest when newer bonds are paying 8 percent.

"Everyone holding bonds this year was hurt by the interest rate increases," said Jeffrey M. Schaefer, SIA research director, and George R. Monahan, director of securities industry studies.

Their study was published at the SIA's recent convention here, where brokerage firm executives from both Wall Street and Main Street gathered for their annual gabfest.

This year, with the brokerage industry under scrutiny from regulators for its sales practices and for using bonuses to recruit brokers from rival firms, the executives were worried about their public image. But they also seemed stunned by the scope of the bond market crash.

The Schaefer-Monahan report described the losses sustained by fixed-income investors and the impact on the big Wall Street brokerage houses that specialize in bonds.

The SIA analysts pointed out that the damage suffered by investors depended on the type and maturity of bonds owned. As a group, bonds lost 10 percent of their market value from Jan. 1 to Nov. 15.

However, the longer the maturity of the bond, the deeper the price plunge. Thus, one- to three-year Treasuries were down less than 5 percent, but the 20-year Treasury bond was down 20.5 percent.

Of the $1 trillion loss, the analysts figured, Treasuries lost about $500 billion, corporate bonds lost $300 billion and municipal bonds lost $200 billion.

Here are the declines in bond values for different types of bonds and maturities:

* Treasury Master Index, down 10 percent.

* One to three years, down 4.8 percent. Seven to 10 years, down 13 percent. Fifteen years plus, down 16.8 percent. Thirty years, down 20.5 percent.

* Corporate Master Index, down 11.3 percent.

One to five years, down 6.6 percent. Five to 10 years, down 9.2 percent. Fifteen years plus, down 14 percent.

* Municipal Master Index, down 14 percent.

These losses, of course, are based on bond prices only. When the interest paid on bonds is included in a total return calculation, market losses are diminished.

The time required for stock and bond markets to come back from a crash depends on many factors. Going back to 1926, history shows that it takes an average of 29 months to recover from a stock market decline but only 17 months to recover from a bond market decline, according to Derek Sasveld, a consultant at Ibbotson Associates in Chicago.

It took stocks two years -- until August 1989 -- to get back to the peak levels of August 1987. How long it will take the bond market to recover from its downturn is uncertain. While a drop in interest rates would bring bond prices back up, no one can be sure when that might happen.

Paul W. Boltz, an economist at T. Rowe Price Associates in Baltimore, said he expected the bond market recovery to be "a slow process," partly because interest rates had fallen to such a low level.

Even if bond prices rally, Boltz said, he doubted they would go up enough to send long-term rates back to 6 percent or 7 percent. "Not as long as the economy is so robust," he said.

Battered Brokerages

The 1994 bond market crash has hurt not only bond owners -- including individuals, pension funds and insurance companies -- but also major brokerage firms that specialize in bond trading. If a firm wants to trade bonds, the SIA analysts noted, it must have an inventory. And the value of that inventory will go up and down, based on interest rate movements. Of late, the value of bond inventories has been falling.

Overall, the analysts noted, profits in the securities industry this year are expected to be down 80 percent from last year. That's a drop from $8.6 billion in 1993, which was a record year, to $1.8 billion this year.

The big Wall Street firms have taken most of the hit. And, to make matters worse, they also have been hurt by a drop-off in investment banking activity as rising rates, falling stocks and a muddled market climate make it unattractive to bring initial public offerings to market.

On the other hand, the SIA study said, small retail firms and regional brokerage houses have been doing much better than their larger Wall Street cousins. Discounters may match last year's record profits and regionals may tie their third best year -- 1991.

Advertising Angst

Securities and Exchange Commission Chairman Arthur Levitt spoke to the SIA meeting and used the occasion to tell the New York Stock Exchange, American Stock Exchange and Nasdaq Stock Market that he is unhappy with their advertising campaigns -- campaigns that everybody agrees are the product of intense competition for new company listings.

"There's no sense in fighting each other," Levitt declared, "I'm dismayed that, after signs of a truce early this year, the SROs {self-regulatory organizations, or stock exchanges} have continued their bitter ad campaigns -- wasting resources of member firms that would be better spent advertising the advantages of American capitalism."

The most vigorous television advertising campaign is run by the National Association of Securities Dealers (NASD), which depicts Nasdaq as "the stock market for the next 100 years." The claim annoys both the NYSE and the Amex.

For its part, the Amex, which uses only print ads, lists companies that have switched from Nasdaq to Amex and notes that Amex has "less volatility, short-sale protection and narrower spreads." Those phrases stir anger at Nasdaq.

The NYSE, according to Chairman William H. Donaldson, has cut back on its advertising, and is not using television. In recent full-page ads, the NYSE stresses that it has the market with "the finest technology," "the largest pool of investors" and a place where "investors' interests always come first."

Asked whether the SEC might try to do something about the ads, Levitt said, "No, the SEC is not going to regulate this. But I sure am going to talk about it. Maybe I can embarrass them into doing a better job."

Donaldson, who claimed that Levitt was not really talking about the NYSE, said that the NYSE had made a special effort in its ads to be "constructive" and had tried not to comment on other markets.

Joseph R. Hardiman, president of the NASD, said operating securities markets "is increasingly becoming a competitive business." As a result, Nasdaq has been using television and print advertising very aggressively. "It's worked very well for the Nasdaq Stock Market," he said.

Amex Chairman Richard F. Syron also said competition was a key factor, but added, "I would rather not do national advertising ... If the other exchanges would stop their advertising, I would be happy to stop mine." Syron said he would be glad to discuss a moratorium on competitive ads.

With a bit of humor, Syron indicated there was another reason he'd be glad to get rid of some of Nasdaq's ads. In October, he recalled, he was attending the Boston College-Notre Dame football game. He was happily watching his alma mater Boston College upset Notre Dame, 30-11. He was happy, he said, until he turned on a TV near his box seat to get the scores of other games. And what was the first thing he saw? The Nasdaq Half-Time Report.