Popular stock strategies can prove perilous to investors, SEC chief warns

Levitt sharply urges using `a vigilant eye'

February 13, 2000|By NEW YORK TIMES NEWS SERVICE

The nation's top securities regulator warned yesterday that some of the most popular stock market strategies, including buying stocks with borrowed money and rushing into hot new issues, might be hazardous to investors.

It was not the first time that Arthur Levitt, the chairman of the Securities and Exchange Commission, advised investors to manage their holdings with caution and prudence. But his tone was sharper yesterday and appeared to be an attempt to shake investors out of euphoria created by many years of abnormally high stock market returns.

In prepared remarks to be delivered at an investment conference in Los Angeles sponsored by the Los Angeles Times and attended by individual investors, Levitt said, "Successful investors, through good times and bad, focus a vigilant eye on managing risk. Periods of promise and prosperity are not an excuse to let your guard down. In fact, it's times like these when you need to raise it even higher."

In an interview two days before the speech, Levitt said, "My sense is that many investors have become more emotional than intellectual about their investment decisions, and this is the time to point out to them the importance of analyzing carefully rather than impulsively."

Pub Date: 2/13/00

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