Many Individuals Still Taking Long View

Despite a stomach-churning drop in stock prices, individual investors said they held course Thursday, providing evidence that it’s often the amateurs--not the pros--who keep their heads when stock prices gyrate.

“Wall Street professionals are neurotic by nature. You’d expect them to react,” opined Trudy Gilbert, an accountant at a Santa Monica-based law firm. “I go in [to the stock market] expecting wide price swings. They don’t scare me.”

Indeed, each of a dozen individual investors reached Thursday in the wake of a 357-point drop in the Dow Jones industrial average concurred that money invested in stocks ought to be invested for the long term. As a result, these individuals maintained they never panic when stock prices dip--no matter how sharply.

“If you need to earn money to put milk on the table, don’t invest in stocks--get a job,” said Leisel Friedrich, a Santa Monica homemaker, who has “six figures” invested in the market. “My strategy is to make money in the long run. And I’ll tell you, all the people who are whimpering today have made plenty of money in the past.”

Concurred Judith Brooks of Al Brooks Ticket Agency in Los Angeles: “People are very happy when the stock market goes up. Do they expect it to [go] up endlessly?”

Meanwhile, Boris Seidel, a La Canada retiree, acknowledged that Thursday’s big drop did make him nervous. But he wasn’t pulling money out of stocks or changing his investment strategy.

“You know, when the real estate market went crazy, my house was probably worth substantially more than it is today. When it pulled back, it was worth a lot less. But, you know what? I still live in the same house. It hasn’t affected my lifestyle at all,” Seidel said philosophically. “Today my stock portfolio might be worth less than it was yesterday, but I still have the same number of shares.”

Individual investors may be more stable than professional investors partly because they have less access to their money, speculated Stephen Douglass, a Los Angeles firefighter. Douglass says that he and most of his friends have the bulk of their investments in tax-favored retirement plans and would pay hefty penalties if they withdrew the money prior to retirement.

“If we were able to get at our money at a moment’s notice, maybe everybody would jump on a day like this,” he said. “But, considering that I have 15 years to go until retirement, I’m a long-term investor. I just have to go along for the ride.”

Other firefighters at his station were equally sanguine as they watched the Dow melt down, he said. “A couple of guys said, ‘Oh, good. Share prices will be lower so I can buy more.’ Not a single man here was too concerned.”

Robin Leonard, a 38-year-old Berkeley-based attorney, said she is simply too young to worry about day-to-day gyrations in her retirement portfolio, which is completely invested in stocks.

“Overall, I’m concerned [about market dips] because that is where my whole retirement is. But I have to take a long-term approach. And, fortunately, I’m young enough that I have the luxury of being able to wait this out.”

Newport Beach-based attorney Larry Arnold said he’s disturbed by market drops, but also isn’t planning any rash action.

“It’s not like you are going to sell everything now. That wouldn’t be bright,” Arnold said. “But, I suppose, when stuff like this happens, you ought to pay more attention. You have to look a little more closely at each stock and each situation and try to guess where you think it’s going to go from here.”

While professional investors still predict that individuals could panic if stock prices plunged further, these investors didn’t appear prone to panic. Indeed, they maintained that their investment decisions were based solely on long-term performance and relative values.

If there was one compelling reason they all professed loyalty to stocks, it boiled down to the fact that they didn’t see an opportunity to earn reasonable returns elsewhere.

“If interest rates went back up significantly, I might put more money in bonds,” Leonard said. “But I don’t see that happening any time soon.”

“What would I do [if I pulled money out of stocks]? Put the money in my mattress? Put it in a bank account earning 2% interest?” Gilbert asked. “I’m in the market for the long haul.”

Added Douglass: “If I switch my retirement money into the savings account option, I might make 5% a year. Obviously, 5% is looking pretty good today. But, most of the time, you figure you can do better.”