INVESTORS : Cool Heads Prevailed, but Will It Be a Manic Monday?

Small investors didn’t panic when the stock market took a sudden deep dive late Friday, but the plunge definitely put some on edge, brokers and mutual fund managers said.

Although many investors said they’ll remain calm and might even look for buying opportunities, others are eager to reduce their exposure to a market they see as due for a correction. As a result, many brokerages anticipate that Monday morning could prove to be the Wall Street equivalent of Mr. Toad’s Wild Ride, with some individual investors buying or selling after a weekend spent stewing over Friday’s 171-point Dow drop and mulling the ubiquitous economic and market analyses that will confront them in newspapers and on television.

“Are we looking at another 1987?” wondered John Anderson, 51, a Lake Arrowhead resident, referring to that year’s October market meltdown. “Is this something where everybody’s going to jump off the bandwagon?”

Anderson, who owns two gas stations in Ontario and invests through Newport Securities Corp., said his mix of bonds and stocks was battered Friday. After seeing television reports about tumbling stock prices, Anderson said he was ready to start selling some of his holdings, but was convinced otherwise by his broker.

Brokers elsewhere also found themselves serving as financial therapists for other anxious investors. At some shops, though, callers demonstrated surprising composure.

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“Investors were not showing a tremendous amount of concern,” said Michael Haines, portfolio manager of Denver-based Founders Mutual Funds’ Frontier Fund, which invests in small growth-oriented stocks.

Founders’ $3 billion in funds actually ended the day with more buyers than sellers, indicating that “maybe people understand that things are on sale,” said Steven Shapiro, a spokesman.

Haines said he would not be surprised to see “more follow-through on the downside” when the market reopens Monday. “There’s potential for a lot of intraday volatility,” he said.

“I didn’t see any kind of a panic, and there were very few sell tickets being written today,” said Richard Sample, head of the retail brokerage operations at Cruttenden Roth Inc. brokerage in Irvine.

But Sample and others, recalling the biggest stock market drop in recent memory, said they are bracing for a busy Monday. “A big down day on a Friday gives people time to think about it over the weekend,” Sample said. “That’s what happened in 1987.”

Granted, much has changed since ‘87, when an overload of sell orders caused exchanges and brokerage houses to buckle.

At Charles Schwab & Co., the big discount brokerage firm in San Francisco, automated systems now handle 60% of investors’ calls. Electronic trading from individuals’ personal computers also accounts for a significant amount of business. As a result, the company does not expect that even a big surge in orders would bring the system to its knees.

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Friday afternoon, Schwab did enlist 100 members of its “Swiss army”--registered brokers who hold other jobs at the firm but help out at busy times. Randy Kirk, manager of Schwab’s Los Angeles branch, said there clearly were investors taking profits on Friday, but that there also “was a lot of cautious money on the sideline that really wanted to buy in and had been waiting for a sell-off.”

Jack White & Co., a 24-hour-a-day discount brokerage operation based in San Diego, is beefing up staff for its weekend hours and for Monday morning. “We’re not projecting huge moves,” said President Jack White. “But people are awfully nervous. You certainly can smell there are a lot of quick reactions to any” bit of news.

Anderson, the Lake Arrowhead investor, said he feels frustrated that his holdings can be so vulnerable to vague market forces, such as the unexpectedly favorable unemployment report that prompted Friday’s sell-off.

Many investors were unbowed.

“I didn’t even see the market today--I’m a long-term investor,” said Shinichi Hamashige, a retired doctor in Irvine who said he has millions of dollars invested in a mix of pharmaceutical, energy and high-tech stocks. “It’s just another correction; it had to happen. Whenever the market gets overinflated it drops.”

In fact, Hamashige said he would welcome another downturn Monday. “If it happens, then great,” he said. “It gives me a chance to buy.”

Groves reported from Los Angeles and Miller from Orange County.