Orange County Stocks Take a Relatively Short Tumble : Investing: Shares of two-thirds of the largest publicly traded companies lost value, but none more than 12%.
Orange County was not immune to Friday’s 96-point drop in the Dow Jones Industrial Average. Fortunately, the impact was slight. Two-thirds of the county’s largest publicly traded companies’ stocks lost value in the day’s frenzied trading, but the percentages were relatively small--none greater than 12%.
Of the 100 local stocks tracked by the Times Orange County Edition, 66 lost value Friday and eight posted gains. The portfolio of an investor who owned one share of each of the 100 stocks would have been worth $1,013.50 when the market opened Friday. By the end of the day, that portfolio would only have been worth $976--a loss of $37.50.
Local market watchers called Friday’s action a periodic market correction spurred by a Federal Reserve Board interest rate increase and by investor nervousness about the Dow’s breaching the psychologically significant 4,000 mark.
At least one Orange County economist, Chapman University President James Doti, saw Friday’s drop coming. In a speech Monday, Doti was advising people to sell their stocks in anticipation of the Fed’s interest rate increase and what he expected would be a corresponding market plunge.
Doti also quipped that the monetary tinkering was driven by President Clinton’s desire to be reelected in 1996--and Federal Reserve Board Chairman Alan Greenspan’s desire to be reappointed to his Fed post that year. The Fed’s intervention is designed to keep inflation under control. An inflationary spiral would severely affect either man’s chance of retaining office.
Irvine investment banker Walter Cruttenden III said he believes that the Fed’s interest rate increase caused Friday’s stock sell-off. But he added that he also thinks the plunge “was a correction that has been long overdue. The Dow’s been going up straight for 90 days without a correction,” he said. “I wouldn’t be too concerned unless this (downturn) went on for a prolonged period.”
Cruttenden said he expects the market to fall again on Monday--although by far less. “Selling begets more selling,” he said, adding that Friday’s decline is not much to get excited about. “When I started in this business, the Dow was at 600 or 700. Even when it hit 1,000, it was not a big deal to drop 60 points or so. Now we’re near 4,000 and we drop 100. Percentage-wise, this shouldn’t matter much.”
Monday is the big question mark, said Larry H. Friend, president of L.H. Friend, Weinress & Frankson Inc., an investment banking firm in Irvine, who expects a continued sell-off. “We need to see whether Wall Street can stop it. It could be in for a short decline. So many people have been waiting for this to happen.
“The market needs a 10% drop. It has been in Never-Never Land. . . . Brokers have been making too much money. Somebody’s going to have to get hurt a little.”
The biggest losers in Orange County were an eclectic group of companies that ranged from a shoemaker and several sportswear firms to a group of health industry and high-tech businesses.
The company posting the largest loss was CorVel Corp., an Irvine provider of medical cost containment and managed-care services. CorVel common shares dropped $2.50 on the Nasdaq market to close at $21.75 a share.
The fickleness of the sell-off was illustrated by the fact that CorVel recently reported fiscal 1994 third-quarter earnings of $1.2 million, or 26 cents a share, almost double its 1992 third-quarter profit of $661,000, or 16 cents a share.
“There was just a lot of nervousness,” CorVel President Gordon Clemons said of Friday’s big stock sell-off. He said he believes the firm’s stock will rise again Monday.
Marvin Loeb, chairman of Trimedyne Inc., an Irvine maker of surgical lasers, said that he got “five frantic calls” from fellow Orange County executives unnerved by the stock drop.
Trimedyne stock closed at $14.125 a share on the Nasdaq market, down $1.75 from Thursday.
Loeb said that the 11% drop in his stock’s value was caused by any announcement made by the company.
“It was just the general market acting terribly,” Loeb said.
Jeff Kilpatrick, president of Newport Securities in Costa Mesa, said that he was not surprised by the stock plunge or that Orange County companies did not take the brunt of it.
“It doesn’t seem to me that Orange County companies were horribly damaged,” he said. “If you didn’t know the market was down, you wouldn’t think Orange County companies as a whole had a terribly bad day.”
