What, Me Worry? Friday Sell-Off a Big Yawn for Most

The Dow may be dropping, but financial advisors and individual investors contacted Friday reported no panic--indeed, little reaction at all, except for scattered plans to buy more stocks.

Keith Douglass, an Upland firefighter and paramedic, said he’s “holding fast� despite watching the Dow Jones industrial average briefly dip below the 10,000 mark--a psychological barrier that market pundits worried would have individuals stampeding to sell.

Douglass, an investor who regularly buys and sells speculative individual stocks, has read that some analysts say the market may drop more sharply in coming weeks.

What will he do if it does? “Nothing,� Douglass responded.

The lack of concern has become a hallmark of recent market drops, repeating the pattern seen after the Dow dropped sharply in October 1997 and again in August 1998. As before, most advisors said stock investors should stick to their long-term plans and ignore short-term dips. Most planners recommend that clients invest in stocks for goals 10 or more years in the future, and advise that they should not invest in stocks if they will need the money within five years.

Financial planner Joel Framson said he received just one call this week from a nervous client who asked if she should sell some of her stocks. The investor decided not to change her portfolio after Framson reminded her of her long-term goals and the volatile nature of the markets.

“This is risk, folks. This is what it feels like,� said Framson, a certified financial planner in Santa Monica. Framson said no other clients called, even after Friday’s 267-point slide in the Dow.

Individual investor Deborah Brandt of Glendale said that the more she learns about the markets, the easier it is for her not to react to swings.

“I used to get really nervous about the market, but now I really don’t,� she said. Her calm is partly the result of taking a class that taught her about the risks and rewards of long-term investing. “We are mainly invested through 401(k) plans, so we just shrug and say, ‘Oh, well. Thirty years from now, today isn’t going to matter much.’ �

Robert Bender, president of Robert Bender & Associates, a La Canada-based investment management and mutual fund company, agreed that short-term market activity is irrelevant.

“What really matters is what’s happening in the big-picture U.S. economy,� he said. A sustained period of low inflation [despite some analysts’ fears for the future], strong earnings growth, technological advances and the government’s budget surplus all strike Bender as positive for stocks.

Neta Gagen, a certified financial planner in Garden Grove, said the market’s swoon prompted her to contact two new clients whose money she had yet to invest. One decided to put his money into the stock market immediately, while the other wanted to ease into equities. Gagen said she will invest the second client’s money over the next six months to reduce the risk of investing just before another sharp drop.

Gagen, however, has no such qualms. She bought more stocks for her own account in the last 10 days--not because she was timing the market, but because her portfolio was out of balance.

“I haven’t had a chance to get to my own account because I’ve been so busy, and I had more cash in there than I wanted to have,� Gagen said. “I don’t pay that much attention in my own account to where the market is. I guess because I have faith.�