Local investors are holding, diversifying

By and large, Southeast Missouri investors are not a risk-taking bunch. But local financial experts say that has been to their benefit as they held their own while others lost big during Wall Street's volatile trading during the past few days.

They have resisted the temptation to sell, instead choosing to buffer their losses by diversifying into more conservative portfolios or even -- gasp! -- buying additional stock while prices are low.

David Willis, a financial consultant with AG Edwards in Cape Girardeau, said the nature of this area has deadened the blow of the stock market slump.

"Don't get me wrong, they've been hurt and it does hurt," Willis said. "But younger people have a lot of time to make up for it, and hopefully older clients have been very conservative and haven't lost as much. For the most part, I think people are hanging in there."

Instead of wholesale stock dumping, investors are adjusting portfolios to assume lower risk, Willis said. That may include a shift to bonds that are safer than stocks or even keeping some in cash.

"They're trying to get a proper mix between equities, bonds and cash," Willis said. "Before, someone aggressive might have had 90 percent in stocks. Now, it's 50 percent in stocks, 40 percent in bonds and 10 percent in cash."

That's much safer, he said, because even if a bond pays only 5 or 6 percent, that's better than nothing.

Odie Lingle, a stockbroker with HD Vest Financial Services in Jackson, Mo., said stockholders are even diversifying if all they invest in is stock.

"They are making sure their stocks are not in just one area," he said. "They don't want to be invested heavily into one individual stock. Most of my clients are holding. They're concerned, like everyone else, but I haven't seen any desire to liquidate or anything like that. People are making some adjustments, but nothing major."

And some are even seeing it as an opportunity.

"I am having some that are even buying right now," said Bob Etherton, an investment representative with Edward Jones in Cape Girardeau. "They're nervous, but some clients are considering it a bargain time and picking up some buys."

Don't drop mutual funds

Those with 401(k) funds also have been hurt, said Lyle Davis, a financial consultant with AG Edwards who handles several of Cape Girardeau County's larger employers. And while some may be tempted to drop their mutual funds, Davis said that's a bad idea.

"It's too late," he said. "Where's the bottom of the market? If you're in a mutual fund, at least you're diversified."

Instead, Davis said, it's a good time to examine how to spread 401(k) assets around.

"You want to have multiple assets," he said. "If you're 22 years old and want to work until you're 60, that's a long time. You can have considerable exposure to the market. You need to get into the water, tie a rope and get out there. The closer you get to retirement, the closer you pull yourself to that beach. Don't get over your head."

What people need to remember, the experts all said, is this is a crisis of confidence, sparked by Sept. 11 and the many scandals that recently have rocked Wall Street.

Davis pointed out that of the 12,000 publicly traded companies, only 13 are being investigated.

"Investors don't believe analysts who say earnings are going to recover, they don't believe CEOs when they say they have recovered, and they don't believe the accountant when the accountant confirms the earnings have recovered," Davis said. "If you can't believe the numbers, what can you believe?"

But Davis said that if all goes right -- CEOs being held accountable, for one -- then investors will become confident again.

"They've gotten their fingers burned on the stove, so they're a little reluctant," he said. "It's going to take some healing to get through this, but it will happen."

smoyers@semissourian.com

335-6611, extension 137