Brokers react with equaniminty THE MARKET STRUGGLES FOR BALANCE

April 01, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

On the final trading day of a week that left the Dow Jones industrial average with its largest point loss in more than four years, Legg Mason broker Mike Dennin is reassuring a client.

"You're doing OK, you're hanging in there," Mr. Dennin says. "We're not panicking here."

So it was yesterday in Baltimore's brokerage houses. No hysteria, no frantic shouting. On Alex. Brown Inc.'s trading floor, you could hold a conversation at normal volume, normally a challenge even on average days.

And at mutual fund company T. Rowe Price Associates Inc., there is no evidence that fearful small investors are stampeding out of stock funds. The company reported that customers have moved only one-tenth of 1 percent of their stock investments into other investments during the market's 273-point fall in the five trading daysthrough Wednesday.

"There hasn't been the angst you would expect when you see the market go down 300 points in six trading days," said Richard Cripps, director of equity marketing at Legg Mason. "We've been conditioned to see these things as buying opportunities."

That may be a little too simple, said Andrew M. Brooks, who runs equity trading for T. Rowe Price. On his computer screen, minutes after the Dow Jones industrial average closed up 9.21 points on the day, was a chart of the wild ride the market took during the day. Up 22.7 points early, down 64 by 10:30 a.m., down 54 at 12:45 p.m., then up and down in the afternoon before finally closing at 3,635.96, an exhausting 9.21-point gain.

"You were whipping around here," he said.

By 4 p.m., 398 million shares had traded on the New York Stock Exchange.

But by day's end, a sign of the mood in the small trading section lay over Mr. Brooks' shoulder, where another trader was playing solitaire on his office computer.

That's not to say that traders aren't paying attention. Mr. Dennin says he has to be careful even if he's not especially worried about the state of the market. "I don't see any reason to push the panic button -- but I'm dealing with other people's money," he said.

Still, he said that while he's been taking more calls than usual, few of his clients seem frightened about the market's turn. "Everybody wants to know why I haven't referred them to Hillary's broker," he said, a reference to the first lady's uncanny .. run in the late 1970s commodities market. "Most of my people are aware that if I thought something was dramatically askance with the market, I would call them and tell them."

Another reason for the relative inaction of small investors, despite the broad market swings, is that a big share of mutual funds -- a vehicle favored by small investors, many of whom didn't invest in stocks until bank deposit rates moved to very low levels in 1991 and 1992 -- are bought by professionally managed 401(k) plans rather than by individuals. Price spokesman Steven Norwitz said 42 percent of the firm's $20 billion in stock assets comes from such plans, which typically have a very long-term outlook.

Even when the stock market lost 22 percent of its value in October 1987, Mr. Norwitz said, only 3.5 percent of the assets Price customers had in stock funds was withdrawn.

Small investors seem more wary of bonds than stocks: T. Rowe Price said customers cashed in or shifted 3 percent of the assets they held in bond funds during March, while the firm's stock fund assets were up.

Yesterday afternoon, the end of a tumultuous week for stocks, 14-year trading veteran Mr. Brooks said he was convinced that nothing fundamentally was amiss.

"I don't think [the last week] is an important event," he said, half an hour after the market closed. "The economy is in good shape and corporate earnings are coming through. . . . I don't know when a bounce is coming, but I know markets generally go up. And I'm proud to be an American."

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