MNeagle
7th May 2010, 06:46 PM
Small investors spooked by market swings
With nowhere else to go, many are 'hanging in there'
CHICAGO (MarketWatch) -- Jack Walsdorf was running work errands on Thursday afternoon when he got his first alert on this BlackBerry that the markets were in a free fall.
Then came another, and another.
"I'm staring at my BlackBerry in disbelief," said Walsdorf, vice president at Converted Organics Inc. /quotes/comstock/15*!coin/quotes/nls/coin (COIN 1.09, -0.09, -7.63%) , a fledgling fertilizer producer based in Boston. "I'm seeing the news alerts and it's becoming a more frightening situation with each one."
Small investors everywhere were jolted from their jobs and afternoons with the kids when the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 10,380, -140.72, -1.34%) made the bungee jump that marked the worst day of trading in history in terms of points dropped. (The blue-chip index dropped more than 990 points in intraday trading Thursday, but recovered and closed down 3%.)
It scared many investors right out of the market, but it also created an opening for others to jump back into stocks they felt they sold too soon.
Chicago mortgage broker Tim Perry was one of them. "It was a little bit concerning, but quite honestly I thought of it as a buying opportunity," he said.
"I've been kicking myself for selling a few of my stocks more than five and six months ago and when I saw them come down in price like that, I thought, 'These are long-term holdings that I can get back.'"
Among his picks was Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 235.24, -0.62, -0.26%) Perry sold his holdings last year for $82 a share. He bought some back on Friday for about $235 a share, convinced that the stock will make him money down the road.
"If you're looking at fundamentals, I don't think any serious investors got spooked about the stuff that happened," Perry commented. "I've been watching the stock market for some time, and it's during those moves that you have to be aggressive if you're a buyer."
Walsdorf, who considers himself a serious investor, was aggressive buying stocks -- on April 1. He made a big bet on the markets that put him ahead 3% in April and backfired on him in a big way this week.
"I was thinking what a genius I am then," Walsdorf recalled. "Now I'm off 5%. It was a white-knuckled ride. You hate to see that level of volatility. I don't know how anyone can be on the right side of that kind of volatility."
The steep dive reminded him of Black Monday on Oct. 19, 1987, when the stock market crashed 508 points for what then was a 22.6% obliteration of value on the Dow industrials. Walsdorf was the head of a tax-shelter department for a now-defunct brokerage on Wall Street.
"We sat around the machines and watched careers get burnt, including my own," he said. "That kind of hole in your stomach that I got then. ... I got it again Thursday."
Mike Ryan felt it too. As a funeral director at Ryan-Parke Funeral Home in Park Ridge, Ill., he said didn't have a clue about Thursday's market shift till he got home from work. It wiped out an easy 5% of his returns on the year, and now he's about flat.
"It's very scary to see when the market is plunging 500 points in 15 minutes," he commented. "But I have to take a long-view approach to it. Eventually this thing is going to work itself out."
Besides, Ryan said, there's nowhere else to go to invest his money. "I'm hanging in there."
Paul DiFranco, an orthodontist also in Park Ridge, Ill., is either prescient or one lucky duck. He said he was riding high in April, enjoying a 20% return on his investments when he suddenly found himself even. Alarmed by such a wide market swing, DiFranco began converting stocks to cash more than a week ago. His last move was on May 5, the day before the plunge.
"The market was volatile; I thought it meant that I was going to go negative," he added. "I've been there before and decided not to go that route again.
"I decided to get out, regroup and go golfing this summer. But I wasn't feeling too good about it until [Thursday] because I was thinking I was missing another 30% jump," DiFranco added. "I guess I was lucky. I could be definitely crying otherwise."
But he's not giving up on the markets and thinks he'll jump back in when they begin to trend upward again.
Despite his setback, Walsdorf is a believer too. "I've got faith in the market," he said. "I just hope it corrects itself and gets back to trading in an orderly fashion soon. I'm 62 years old. I've got hard deadlines approaching."
http://www.marketwatch.com/story/small-investors-spooked-by-market-swings-2010-05-07?siteid=rss&rss=1
With nowhere else to go, many are 'hanging in there'
CHICAGO (MarketWatch) -- Jack Walsdorf was running work errands on Thursday afternoon when he got his first alert on this BlackBerry that the markets were in a free fall.
Then came another, and another.
"I'm staring at my BlackBerry in disbelief," said Walsdorf, vice president at Converted Organics Inc. /quotes/comstock/15*!coin/quotes/nls/coin (COIN 1.09, -0.09, -7.63%) , a fledgling fertilizer producer based in Boston. "I'm seeing the news alerts and it's becoming a more frightening situation with each one."
Small investors everywhere were jolted from their jobs and afternoons with the kids when the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 10,380, -140.72, -1.34%) made the bungee jump that marked the worst day of trading in history in terms of points dropped. (The blue-chip index dropped more than 990 points in intraday trading Thursday, but recovered and closed down 3%.)
It scared many investors right out of the market, but it also created an opening for others to jump back into stocks they felt they sold too soon.
Chicago mortgage broker Tim Perry was one of them. "It was a little bit concerning, but quite honestly I thought of it as a buying opportunity," he said.
"I've been kicking myself for selling a few of my stocks more than five and six months ago and when I saw them come down in price like that, I thought, 'These are long-term holdings that I can get back.'"
Among his picks was Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 235.24, -0.62, -0.26%) Perry sold his holdings last year for $82 a share. He bought some back on Friday for about $235 a share, convinced that the stock will make him money down the road.
"If you're looking at fundamentals, I don't think any serious investors got spooked about the stuff that happened," Perry commented. "I've been watching the stock market for some time, and it's during those moves that you have to be aggressive if you're a buyer."
Walsdorf, who considers himself a serious investor, was aggressive buying stocks -- on April 1. He made a big bet on the markets that put him ahead 3% in April and backfired on him in a big way this week.
"I was thinking what a genius I am then," Walsdorf recalled. "Now I'm off 5%. It was a white-knuckled ride. You hate to see that level of volatility. I don't know how anyone can be on the right side of that kind of volatility."
The steep dive reminded him of Black Monday on Oct. 19, 1987, when the stock market crashed 508 points for what then was a 22.6% obliteration of value on the Dow industrials. Walsdorf was the head of a tax-shelter department for a now-defunct brokerage on Wall Street.
"We sat around the machines and watched careers get burnt, including my own," he said. "That kind of hole in your stomach that I got then. ... I got it again Thursday."
Mike Ryan felt it too. As a funeral director at Ryan-Parke Funeral Home in Park Ridge, Ill., he said didn't have a clue about Thursday's market shift till he got home from work. It wiped out an easy 5% of his returns on the year, and now he's about flat.
"It's very scary to see when the market is plunging 500 points in 15 minutes," he commented. "But I have to take a long-view approach to it. Eventually this thing is going to work itself out."
Besides, Ryan said, there's nowhere else to go to invest his money. "I'm hanging in there."
Paul DiFranco, an orthodontist also in Park Ridge, Ill., is either prescient or one lucky duck. He said he was riding high in April, enjoying a 20% return on his investments when he suddenly found himself even. Alarmed by such a wide market swing, DiFranco began converting stocks to cash more than a week ago. His last move was on May 5, the day before the plunge.
"The market was volatile; I thought it meant that I was going to go negative," he added. "I've been there before and decided not to go that route again.
"I decided to get out, regroup and go golfing this summer. But I wasn't feeling too good about it until [Thursday] because I was thinking I was missing another 30% jump," DiFranco added. "I guess I was lucky. I could be definitely crying otherwise."
But he's not giving up on the markets and thinks he'll jump back in when they begin to trend upward again.
Despite his setback, Walsdorf is a believer too. "I've got faith in the market," he said. "I just hope it corrects itself and gets back to trading in an orderly fashion soon. I'm 62 years old. I've got hard deadlines approaching."
http://www.marketwatch.com/story/small-investors-spooked-by-market-swings-2010-05-07?siteid=rss&rss=1