Stay the course is the advice of brokers

Paul Clinton

Local market hawks urged investors not to jump ship in the face of

Monday’s precipitous sell-off in which the market cratered.

All three major indexes fell sharply when open-market bells rang

at 6:30 a.m. Pacific Standard Time.

The Dow Industrials ultimately fell 307 points, to 8,214, while

the Nasdaq slipped 52 to 1,369 by the 1 p.m. close. Standard & Poor’s

500, usually considered the most spot-on benchmark of the economy’s

health, fell 31 to 864. All three slipped about 3.6% and finished

near their lows of the day.

“You need to have a long-term view and not pay attention to the

daily noise,” said Bob Greenberg, who owns a Costa Mesa investment

planning firm. “That’s really the ideal way to manage money.”

Greenberg, who owns Financial Network Investments, and others said

weekend developments in the Iraq war effort contributed, in large

part, to the sharp declines on Wall Street on Monday, reversing two

weeks of gains.

The Dow had, since closing March 11 at 7,524, rallied nearly 1,000

points to close out last week at 8,521. The Nasdaq, during the same

time frame, moved from 1,271 to 1,421.

But grainy images of American prisoners of war and heavy fighting

around the Iraqi cities of Basra and Nasiriyah put to rest the notion

that coalition forces would quickly subdue Iraqi fighters.

“The market tends to flop back based on fear and greed,” Greenberg

said. “People thought this would be over quick. [The earlier buying

showed] they wanted to jump in and get the quick hit.”

Bond guru Bill Gross, who manages the world’s largest bond fund at

Newport Beach-based PIMCO, appeared on CNBC’s “Power Lunch” program

Monday morning to address the selling.

During the show, Gross said investors were in a “flight to safety”

to fixed-income investments. An end to the conflict would go a long

way toward restoring a much healthier market, Gross said.

“Coming out of the conflict, we might have some better news if oil

prices come down, if stocks go up and if confidence resumes,” Gross

said. “The biggest concern I have is really the guns-and-butter

policy of this government.”

Gross said President Bush’s plan to cut taxes while increasing

war-related spending could be troublesome. The federal government is

projected to have deficits of $400 billion to $500 billion in the

coming years.

* PAUL CLINTON covers the environment, business and politics. He

may be reached at (949) 764-4330 or by e-mail at

paul.clinton@latimes.com.