“Market watchers blame much of last week’s sell-off on institutional investors. Some mutual fund managers are selling out to raise cash just in case more individual investors cash out in the future.” – Detroit Free Press, 9/22/01
“Last week, many institutional investors clearly were choosing to sell first and ask questions later about what might be truly fair share prices.” – Los Angeles Times, 9/23/01
Seasoned Experts Prove Much Better at Guiding Hysterical Sell-Off
New York, N.Y. (SatireWire) – Heeding the advice of those who know the markets better, most individual investors kept their cool during Wall Street’s historic plunge, allowing seasoned, market-savvy professionals to do the panicking for them.
“What we didn’t need last week was for every Tom, Dick, and Harry to stampede for the exits and sell everything they own,” said Steven Kasalackis of the Fidelity Magellan fund. “That kind of behavior should be left to the experts.”
Across the country, small investors offered similar sentiments, and expressed relief that steadier hands were running the ship aground.
“I kept telling myself I didn’t sell because of patriotism, but the truth is, I don’t have access to the kinds of information the pros have, and I didn’t want to panic with my money,” said Janice Leeman of Ocala, Fla. “I felt much more secure knowing that they were panicking with my money.”
Ironically, some small investors claim the sell-off bolstered confidence in their own stock-trading abilities. “All last week I kept thinking, ‘God, I’ve got to sell!” but I didn’t,” said Stan Persik, a realtor from San Diego, Cal. “Then when I saw the big guys were selling, I thought, ‘Ha! See, I was right!’”
In fact, as stocks rebounded this week, some speculated that small investors have proven themselves more stable and savvy than the so-called major players. By successfully reigning in their fear, they claim, Tom, Dick, and Harry have refuted the theory that only big investors are mature enough to play the markets.
Vanguard spokesman Carl Banalogi, however, wasn’t buying it. “If anything, the sell-off only reinforced the theory,” he said. “If you were in the markets last week and you didn’t panic, you had no business being in the markets in the first place.”
BusinessWeek columnist Niles Fermowicz agreed. “If the situation were reversed, if major players sat out and small investors were trading, I don’t think you’d have seen the Dow fall as steadily or as far as it did,” said Fermowicz. “Clearly, the professionals are much better at this.”
So what should the individual investor do now?
“If you own stocks, the best thing to do is ignore them,” said Banalogi. “Go out to dinner. Watch a ballgame. Spend some time with your kids. Rest assured that if things are going to get any worse, we’re perfectly capable of leading the way.”
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