- The Washington Times - Friday, March 16, 2001

Individual investors remained calm this week as their institutional counterparts went into a selling frenzy on Wall Street.

Washington-area investors say they are in the stock market for the long haul. Even though it's painful to see gains from a year ago melt away, most are confident the market will rebound by the time they want to cash in their investments.

Adam Nelson, 25, started investing in 1997, gained when the markets skyrocketed, then lost 40 percent of his gains as stocks fell. But he is not worried.

"I'm kind of annoyed by it, but at the same time it's a long-term investment," said Mr. Nelson, a state legislative coordinator with the American Institute of Certified Public Accountants.

Institutional investors are more than annoyed. A sell-off prompted by poor corporate earnings news and a global economic slowdown sent the Dow Jones Industrial Average below 10,000 Wednesday for the first time since Oct. 18. The Dow rallied 58 points yesterday to 10,031, but the index is down 7 percent for the year. The Nasdaq Composite Index is down 21.5 percent this year, falling 31 points to 1,940 yesterday.

But the individuals who stand to lose or gain the most from the stock market investors with 401(k)s, pension plans or mutual funds they are counting on for retirement seem relatively nonplused.

Tal Daley concededly has an edge as a senior vice president and director of marketing for investment firm Legg Mason Inc. He will need the money he has invested to pay for his son's college tuition next year.

But he's prepared. When his son, now 18, was 15, Mr. Daley started moving investments into bonds and now has enough money for the boy's freshman year secured.

"Now I'm worrying about, what will the market look like his junior and senior year," he said.

Newer investors are more concerned.

"We have an on-line brokerage account, but when the market started to tank last year, I stopped putting money into it every month," said M. Elizabeth Dick, 32, a manager of finance reporting at a large technology company in Lake Worth, Fla.

She opened the account with $500 as a Christmas gift for her boyfriend at the end of 1999.

"It's still doing OK. It was up and down up to $1,200 at its top, and now, before the last couple of days it was about $700.

"But I'm afraid to look at it now. I would just as soon not depress myself."

Financial planners are sending their clients soothing messages.

"I think people understand the long-term [investments] work and not to panic," said certified financial planner Elissa Buie of Financial Planning Group in Falls Church, Va. "The market is not going to go to zero."

But she said some clients are still worried about their money.

"We rarely hear from our clients, but there's more of a level of concern now than during drops [in the market] before," said Ms. Buie, who usually advises against short-term investments. "We acknowledge it's scary and that we're keeping our eye on it."

Investment advisers like Ms. Buie caution clients that market drops are sometimes inevitable.

"Any investment method you choose is going to have a dark day eventually," said Stephan Cassaday, president of Cassaday & Co. Inc., an investment advisory firm in McLean, Va.

"But if you broadly diversify [your investments] you reduce risk," said Mr. Cassaday, who is also president of the Financial Planning Association's National Capital area chapter.

Administrators of pension funds also take a long view.

"From our perspective, [the market drop] doesn't mean anything," said William Leighty, director of the Virginia Retirement Fund. The fund, which provides pensions to 98,870 retired state workers, dropped from $40 billion last year to $38 billion this year.

Mr. Leighty said employees are guaranteed benefits regardless of financial conditions, so pensions are not in danger. Neither is the fund's solvency, he said.

The fund pays out $1.2 billion a year and receives $1 billion in contributions. It operates off its cash flow, which allows administrators to hold onto stocks in a down market.

"We look at times like this as a buying opportunity," Mr. Leighty said.

Juliet Piekarski, a D.C. marketing professional, said she is also taking advantage of deals in the market.

"I love it… . It's great, because we're buying low," she said.

She and her husband starting investing last year, and they own stock through three "fairly aggressive" mutual funds, she said.

Her father, Phil Taylor, takes a different view.

"I knew this was going to happen, so I pulled out of the market about 14 months ago," said Mr. Taylor, a retired government employee who owns an information security firm in Florida.

He put the proceeds into certificates of deposit, and has made cautious, blue-chip investments in the market since then to prepare for retirement.

He said some friends in Florida have not been so lucky people who were millionaires last year, and spent accordingly, lost their shirts.

Greg Fine said his parents have moved their investments into more secure vehicles like CDs as well.

Mr. Fine, vice president of chapter relations and development for the Council of Growing Companies in McLean, said he is in a wealth-creation mode, while his parents are in a wealth-preservation mode a wise place to be for individuals who need money sooner rather than later, he said.

"I'm sad I don't have an extra $1 million lying around, because there are a lot of good deals out there," he said.

• Kristina Stefanova and Donna De Marco contributed to this report.

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