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Brokers -- Look to the future

July 24, 2002|by CANDICE BOSELY

Advice given by area financial professionals to those worried about the volatile stock market is not nearly as tumultuous as the market itself.

They all agree on a few basics - Do not sell. Diversify. Buy. Think long term. Mark Aug. 14 on the calendar. And, one said, don't watch television.

The market closed at its lowest point Monday since October 1998, and investors winced again Tuesday when the Dow Jones industrial average closed the day down 82.24 points at 7,702.34, and the Nasdaq composite dropped 53.60 points to 1,229.05.

Area brokers, however, say investors should be wary of focusing on the present.

"It's scary for certain," said Karen Coyne, an investment representative at the Edward Jones office in Inwood, W.Va. "I think people are just afraid with everything that's going on ... but, really, the bottom line is that the economy is strong."

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Despite the market plunge, terrorist attacks and financial peril of companies like Enron, Kmart, Tyco and WorldCom, Coyne said investors who delineate their money with the long term in mind should not worry because they understand that the sell price today will not be the sell price in 10 or 15 years.

"You will drive yourself crazy if you read the paper every day or watch CNBC every morning," Coyne said of investors who constantly check their holdings. "Over any 10-year period, the market has always succeeded."

The key to success is a diverse portfolio, several financial professionals said. Investors should put some money in large companies, some in bonds and CDs, and reserve a bit for smaller companies and international stocks, they said.

Sidney Huguenin, branch manager and associated vice president of Legg Mason Wood Walker Inc. in Hagerstown, said no investor should have all of his or her money in one sector of the market.

"The worst thing you could have done 10 years ago was be fully invested in tech stocks," and now be down 90 percent, he said.

Because stock prices are low, Huguenin said "now is probably a time to cautiously test the water, investing. Now is absolutely not the time to sell."

Huguenin and Charles Schlichter, a financial professional in Chambersburg, Pa., with The MONY Group, said Aug. 14 may be the answer to today's questionable market.

By that date, chief executive and chief financial officers with 1,000 companies must file federally mandated statements that attest to the accuracy and honesty of their companies' most recent financial statements. Securities and Exchange Commission chairman Harvey Pitt announced the new requirement in June as a means of restoring investor confidence.

Since a lot of CEOs are restating their earnings, Huguenin believes some investors have lost faith. Between now and then, he said he's hopeful the market will right itself.

Schlichter said the market seems, but should not be, driven by literal and figurative foreign factors - the Middle East, threat of another attack and corporate dishonesty - rather than the actual U.S. economy.

"Even though the economic fundamentals seem to have improved somewhat and continue to improve, the investing public is essentially disinterested," Schlichter said.

"I think a lot of investors are waiting for at least one of two things. One is seeing at least some of the dishonest people actually sent to jail," Schlichter said. The other thing people may be waiting for is Aug. 14, he said.

Those looking to invest should invest, Schlichter said.

"But dabble, rather than throw everything in they can," he said.

And buy now, sell later.

"As you look at whether to invest, a phrase that I heard many years ago was, 'If you want to make money, you buy straw hats in the winter,'" Schlichter said.

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