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.
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