Despite the two-week stock market slide that culminated Friday in a 108-point plummet, Orange County investors seem to be avoiding panic, biding their time and possibly looking for bargains, local brokers said.
At least, they said, panic has not set in yet. Telephones were ringing wildly at most local brokerages, but customers mainly were seeking reassurance and were not selling off their holdings, brokers said.
"It's been kind of crazy," Christopher Dillon, a broker at the Newport Beach office of Merrill Lynch Pierce Fenner & Smith, said Friday afternoon. "I don't know anyone who isn't concerned. There are a lot of red flags being raised."
But Dillon said he doesn't believe that Friday's 108-point drop in the Dow Jones average signals the end of the five-year bull market. "This is just a little sweating time," he said.
Friday's drop--the largest single-day decline in stock market history--raised the total slide for the last two weeks to 394 points. And Orange County companies didn't escape unscathed.
The stock prices of 85 of the 100 largest publicly held companies in the county fell an average of $1.04 a share in the last week, and the stock of 21 of the companies lost $2 or more per share during the week, according to statistics from Newport Securities Corp. in Costa Mesa.
Viratek, a pharmaceutical marketing firm in Costa Mesa, was the biggest loser. Its stock closed at $21.75, down $5.75 a share for the day and $8.25 a share for the week. A contributing factor, though, was the firm's third-quarter financial report, released Friday morning, which showed a $3.2 million loss and a 90% drop in revenues for the quarter.
Despite the falling market, local investors are not hurrying to sell, brokers said.
"There's really been no problem with Orange County investors," said Jeffrey Kilpatrick, president of Newport Securities, which specializes in investments in Orange County companies. "If anything, we're looking for bargains now."
While local brokers cited traditional reasons for the continuing fall in stock prices--higher interest rates and worry over inflation--they said they believe that the real reason is that investors simply think that prices were too high.
"Two weeks ago, the market was up 40% this year alone, and that's high," said Thomas J. Doherty, branch manager of the Dean Witter Reynolds Inc. office in Laguna Hills. He said he hopes the two-week slide is only the market correcting itself.
Most local investors, the brokers said, are holding onto their stock because most investments are in blue-chip firms like General Electric, General Motors and IBM. Even though the blue chips were hit hard, the brokers said, local investors are confident that those companies will rebound.
And while the plunging prices forced U.S. investors to meet margin calls--payments on loans taken to buy stock--local investors have generally been immune because most pay cash for their stock purchases, several brokers said.
Dean Witter's Doherty said he believes that local buyers have been staying out of the market, "sitting on the sidelines with a gigantic amount of cash waiting to buy--willing to buy if they see the downward spiral temper a little bit."
Many investors have been getting out of the more volatile stocks in the last few weeks and have a lot of cash ready to reinvest, said James Tarzynski of Crowell Weedon & Co. in Laguna Hills.
The market's drop will mean excellent buying opportunities for investors, said Scott Barringer, an executive vice president at Bateman Eichler Hill Richards Inc. in Newport Beach.
"I feel like a little kid in a candy store," he said, rattling off the names of stocks like Walt Disney, GE and Phillip Morris, whose prices he believes have fallen to bargain levels. "If you sell right now, you're just doing what the typical investor does, buying high and selling low."
At Shearson Lehman Brothers in Orange, broker Roy Shapiro said his firm and the investors it buys for will start buying "selected issues" Monday morning.
"I had one fellow who's always wanted to buy Chrysler stock," he said. "He called the other day and said, 'When (Chrysler) hits $38, I want to buy as much as I can afford.'
"Today he was delighted to buy it at $33."