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Investors Wary of Wall St. Swings

October 17, 2002

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NEW YORK (AP) _ The stock market is soaring, but the individual investor is staying grounded for now.

After nearly three years of painful declines, it’s going to take a lot more than one spectacular week to restore the average person’s faith in Wall Street, and to get them moving hard-earned money back into stocks.

``It’ll be a while before I’m excited again,″ said Dick Garman of Overland Park, Kan.

Garman, 55, who runs a chemical and biological safety company in Kansas City, Mo., still has some investments in stocks. He’s holding on them but not doing any more buying now.

He and others say they need to see stocks not just climb higher for a while, but hold onto their gains. That could mean missing out on the first big rise of a recovery, if that’s what the Dow Jones industrial average’s 1,000-point climb since last Thursday represents.

Typically, larger institutional investors are the first to start buying when the market begins moving upward. But individuals want proof that they’re not just buying into another mistake.

``The market’s not fooling me,″ said David Diaz, 34, of Baltimore.

Diaz, who works for the National Labor Relations Board, said he staying put with some mutual funds and stocks, not investing more or less right now.

``I’m nervous to make changes,″ he said.

Even with the latest rallies, the Dow is still down 17 percent so far this year. The Nasdaq composite index is down a stunning 35 percent, and the Standard & Poor’s 500 index is down 23 percent.

And big triple-digit jumps in the Dow have become daily occurrences _ it rose 378 on Tuesday, dropped 219 Wednesday, then bounced 239 Thursday.

``It is like the market is hitting such extreme peaks and lows that even a small rally doesn’t do much for my optimism,″ said Christie Zielinski, of Chicago.

The 27 year-old public relations executive said she plans to see a financial planner next year, and unless the market is decidedly recovering, she intends to look into real estate, not stocks.

``The market has been so unpredictable lately and real estate has been so steady,″ said Zielinski, who continues to contribute to her 401(k) account.

Many investors are still more comfortable having safer investments, such as bonds and CDs, along with a stockpile of cash.

Stan Miller, 48, of Mandeville, La., isn’t about to switch his 401(k) assets to equities from bonds and U.S. treasuries.

``I’m just holding tight,″ he said.

Much of investors’ skittishness come from having been faked out by previous jumps that turned out to be only so-called bear market rallies.

Throughout this protracted market slide, stocks have sometimes jumped on better-than-expected earnings reports, only to drop again when more profit warnings and gloomy economic reports came. This week’s spree has been largely fueled by surprisingly good results from such companies as IBM, General Motors and Citigroup.

``It happened a few months ago, and that suckered everybody again. Then, it just got worse after that,″ said Miller, a salesman in the oil services industry.

During the bull market, Miller thought his technology-heavy portfolio would pay for his children’s upcoming college tuition bills. Now, he’s just trying to get back to even, having lost more than $20,000 in a margin account.

``I am just going to hang onto what I’ve got, and sell some of my losers,″ he said.

Not everyone is so skeptical.

``I’m looking at stocks now... Everything is so undervalued,″ said Joe Sibilio, 43-year-old accountant from Essex, Md.

And software consultant Jason Nixdorf, 29, of Charlotte, N.C. admitted to being something of a bull at heart: He and his wife continue to add to their stock investments as their income increases _ but carefully and in small amounts.

``In the long run, it is going to go up,″ Nixdorf said. ``It’s not like I am saying, `Let’s put $10,000 in.′ I am not that bullish.″

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