NEW YORK >> The year isn't even half over, but many stock investors have the uneasy feeling that 2002 is destined to be another loser. Prospects of a third straight year of losses have left shareholders apathetic, prompting them to sell or stay out of the market altogether. Investors starting to
throw in the towelShareholders, fearing a third straight
losing year, are selling stocks
or just staying in cashBy Amy Baldwin
Associated Press"I am worried. I have been watching our portfolio sink. In the last two years, what has happened in the market makes us cringe," said Doreen Bame, 59, of Huntington Beach, Calif., who manages investments for herself and her husband. "Will we, in our lifetime, be able to recoup the losses in our portfolios? How long will it take? Will it be five years? 10 years?"
Bame, a personal trainer, said she recently sold mutual fund shares, putting the proceeds in a money market account until she's convinced business is improving and stocks are advancing again.
"I have a lot of money sitting in cash, waiting for the economists and all to say that the market has turned around, and it is time to buy again," she said.
Investors have been pulling back from the stock market for weeks amid a stream of corporate profit warnings, first-quarter earnings shortfalls and lack of positive outlooks from companies. The Dow industrials and Nasdaq composite index have suffered weekly declines for five of the past six weeks.
That doesn't mean there hasn't been good news about the economy or earnings. Earlier this month, for example, General Motors raised its expectations for 2002, an indication that consumer spending remains relatively strong. And a variety of data from the government has also shown improvement.
Still, doing nothing, which is essentially Bame's approach now that she's sold off shares, is the strategy many investors are using. That's been apparent in light trading volume and brief, unsustained rallies.
"Nobody is real excited right now. What I am hearing more and more from investors is, 'I don't open my statements anymore. I don't look at my 401(k),"' said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. "It's not fun anymore. When something is not fun anymore, you walk away from it."
Investors' indifference is getting even more serious. Consider that the market stumbled again yesterday, this time despite a robust assessment on the economy. The Commerce Department said gross domestic product soared in the first quarter at an annual rate of 5.8 percent, surpassing analysts' expectations of 5.0 percent. Earlier in the week, analysts believed that a better-than- expected reading would trigger a rally.
Instead, the markets indexes displayed greater weakness, retreating to levels not seen in months. The Dow finished the week below 10,000 for the first time since late February. The Nasdaq slipped beneath 1,700 for the first time since early November, and ended the week at level not seen since mid-October.
"We are hitting some new emotional lows for people," Lydon said.
Even so, not all investors are rushing to sell or are sitting on cash. Wall Street can take some solace in knowing that some investors continue to invest regularly.
"I am a buy-and-hold person. I am only 32. So, I don't need the cash now, and 30 years from now, if I was smart and invested regularly and ignored the ups and downs, I will have a nice little nest egg," said Lewis Goldberg, a public relations executive in New York. Goldberg said he invests a couple hundred dollars a month.
Likewise, Mark Rust, a lawyer in Chicago, says he's investing for the long haul, rather than for quick returns.
"I don't invest for the purpose of getting to the end of the year, and jumping up and down," Rust, 45, said. "I'm very steady. I'm doing everything the same as two years ago."
The market's major indexes ended the week with steep losses. The worst performer was the Nasdaq, which posted a weekly loss of 132.94, or 7.4 percent. Yesterday, the Nasdaq fell 49.81 to 1,663.89, its lowest close since Oct. 18 when it stood at 1,652.72.
The Dow lost 346.39, or 3.4 percent, for the week. Yesterday, the blue chips dropped 124.34 to 9,910.72 to their lowest close since Feb. 21 when they were at 9,834.68.
For the week, the Standard & Poor's 500 index fell 48.85, or 4.3 percent. The S&P stumbled 15.16 yesterday to 1,076.32, its weakest close since Oct. 31, when it was at 1,059.78.
The Wilshire Associates Equity Index, which represents the combined market value of all New York Stock Exchange, American Stock Exchange and Nasdaq issues, ended the week at $10.208 trillion, down $426.79 billion from the previous week. A year ago the index was $11.508 trillion.