Many Individual Investors Stay Calm, See Buying Opportunities in Sell-Off

Somebody was panic-selling in Tuesday’s manic market, but many individual investors say they stayed calm. Instead, many saw Tuesday’s momentary crash in technology stocks as a natural correction in an overheated market--even a buying opportunity.

“I think there’s going to be a lot of growth in the technology sector,” said Linda Nelson, a retired teacher from Newbury Park. “Right now I wouldn’t do anything. But if some of these stocks go down 15%, 25% or 30%, I might buy more. Certain companies I think are excellent, and I have been waiting for the price to fall a bit before I bought.”

Sara Hammes, a 35-year-old Angeleno, said she noticed the massive sell-off early Tuesday and wanted to use the market correction to buy shares in Lucent Technologies Inc. and Cisco Systems Inc., which had previously been too dear.

But the director of strategy for IXL Inc., an Internet professional service provider, was busy with her day job; by the time she had a chance to trade, the stocks had bounded back.

Thanks in part to widespread calm among rank-and-file investors such as these, the market recovered from most of its huge early damage.

Ken Janke, president of the National Assn. of Investors Corp., an organization that helps individuals form investment clubs and learn about the markets, was watching CNBC at lunchtime in Detroit when the Nasdaq composite index hit its nadir. By the time he got back to his office, the trend had reversed.

“The two most insignificant numbers in the world are the noon market averages and the half-time scores of an NBA game,” said Janke, who attributed Nasdaq’s rebound to savvy moves by small investors. “Our members look at stocks and determine that this company is worth between this price and this one. When they drop to that level, they want to buy it. That may be what happened today.”

Although many investors were clearly selling into the early-morning panic, several mutual fund companies reported that call volume was normal and that the individuals who traded were as likely to buy as to sell.

“Our science and technology fund had twice as many exchanges into the fund as out today,” said Steve Norwitz, spokesman for T. Rowe Price Associates Inc., a mutual fund company headquartered in Baltimore. “We won’t have firm numbers until [today], but, so far, it looks like investors are looking to take advantage of drops rather than run for cover.”

Added Jim Atkinson, managing director of Investec Guinness Flight, an investment management company based in Pasadena: “I just talked to a woman in our investor center and the only unusual activity she’s had today is people calling to see if there’s been any unusual activity. Nobody seems alarmed. I have not heard any panic, or even serious concern, on the part of anyone that I talked to in the past couple of days.”

Fidelity Investments in Boston also reported that more money was coming into its stock funds than was coming out, and that call volume was up only slightly.

Vanguard Group Inc. in Valley Forge, Pa., said Tuesday was normal, while Monument Funds in Bethesda, Md., which manages Internet and biotechnology mutual funds, said some money had been pulled out Monday, but the numbers were not significant.

“Most of our investors have been taught to hang tight,” said Monument President David Kugler.

That’s not to say there weren’t tense moments--and some regrets.

“A week ago Friday, I was telling my wife that my portfolio is up so much it’s unbelievable, and my wife says to me, ‘Frank, get out.’ Naturally, I didn’t. Now I’m watching the market and getting sick,” said Frank Glaser, a retiree from Rancho Palos Verdes, early Tuesday. “We weren’t smart enough to act on our gut feel, so we have to suffer the consequences.”

But Glaser added that he wasn’t planning to sell anything now. And, since his portfolio is diversified, he hasn’t lost much on paper.

“Net, I’m probably all right,” he said. “But, boy, does it hurt.”

Added Susan Brainin-Martin, president of a Los Angeles technology consulting firm: “I’m sorry, naturally, because we were all a lot richer last week. But I’m a long-term investor. I believe in these companies. Things aren’t so bad really.”

Some investors said they will jump back into the market, including volatile technology stocks, when they believe the time is right.

“I’m going to wait until it settles a little, but I’m definitely going back in,” Glaser said. “When I feel that the retreat is enough, I am willing to gamble. This is not the end of the world.”