Some Investors Take Sell-Off With a Shrug

As stocks tumbled on Wall Street on Friday, Westlake Village stockbroker John Esposito had to do a lot of hand-holding.

Panicked investors called throughout the day, alarmed at Friday’s record 616-point plummet of the Dow. The Nasdaq fell 355 points.

Margin traders--those who purchase stocks with borrowed money, then have to cough up the difference as stocks lose their value--were stung the most by the falling stock prices, Esposito said.

“The day traders are toast--just total toast,” he said. “We go through this every few years with the margin players. . . . Panic, irrational selling, fear. People are scared out of their minds over the weekend.”

With record numbers of margin investors contributing to the market’s volatility, Esposito saw Friday’s nose dive as a basic correction to a market that has skyrocketed for months--thanks in part to overly inflated technology stocks.

“We’ve got to wash that speculation out of the market before we can go anywhere,” he said. “The scared people run.”

Matters are worse for some investors because personal income taxes are due by Monday at midnight. “People are forced to sell today because they’ve got to cover their checks to the IRS,” Esposito said.

Some Ventura County investors saw Friday’s downturn as an opportunity to buy stocks in solid companies, predicting that the market could even out within a week.

“Monday could be another black Monday,” Esposito said, “but I’m looking for some things to buy that I’ve been shopping and waiting for. It may be over in a day or two.”

Chris Hardt, a Westlake Village-based financial advisor with Edward Jones, wouldn’t venture a guess as to when things would turn up on Wall Street. But he encouraged his customers to ride the spiral out.

“We’ve had some customers that are concerned,” he said. “But we just remind them . . . not to be shaken out by a market that’s temporarily down.”

Wayne S. Podell, an AG Edwards & Sons investment broker based in Oxnard, saw Friday’s correction as inevitable because the market had shot up too quickly in past months.

“It makes sense,” he said. “It doesn’t scare me.”

Nancy Jaeger and her husband, Jim, both Camarillo retirees, lost less than 3% of their total portfolio Friday, she estimated. The couple, whose investments include Apple Computer, McDonald’s, Kellogg’s, Exxon Mobil and Cisco Systems, aren’t alarmed over Friday’s downturn.

“I don’t make my investment decisions based on one day,” said Nancy Jaeger, a 64-year-old former substitute teacher who invests with a Camarillo investment club.

The couple live off their pensions and Social Security, not dividends, she said. They plan to use their stock investments for retirement, but not immediately.

“If you’re nervous looking at this stuff when it goes down, maybe you shouldn’t be in the stock market,” she said.

Doreen Smith, 69, who is treasurer of the Camarillo investors club, also shrugged off Friday’s nose dive.

“It’s happened before,” she said. “It does go down, but then it comes back up.”

Smith planned to sit down with her family’s portfolio on Sunday and consider buying more stock while values are low.

“You’re listening to the eternal optimist,” she said.