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Wall St.'s Bulls: Why the Angst?

Stocks are bounding to new heights, but many shareholders are feeling uneasy. The reasons for the big rise may also explain why this market is producing so little joy.


What if Wall Street gave a party and everybody showed up--but almost nobody had any fun?

As the great stock bull market of the 1990s plows onward, the tens of millions of American shareholders are richer by a collective $1.6 trillion in the past year alone. Yet their mood seems to move inversely with their ballooning portfolios.

Instead of excitement, hoopla and the smugness that comes with being "in the know" about stocks--all hallmarks of previous American bull markets--investors' emotions run more to guilt, anxiety, apathy and even mild disappointment.

Listen to Jan Chatten-Brown, a 49-year-old Los Angeles attorney who has been investing in stock mutual funds for 10 years.

She's glad to be making money, of course. But she worries that "stocks seem to do best when [firms] are laying people off. Since we're all in this economy together, I find that a bit unnerving."

Among professional money managers, the past 13 months have been a continual and mostly losing battle to keep up with the Dow Jones industrial average, which soared 33.5% last year and is up an additional 8.5% this year.

Many fund managers "don't understand what's going on" with the economy or the market, says Alfred Kugel, strategist at the investment firm Stein, Roe & Farnham in Chicago. "That's why it's not fun."

And then there are new investors such as Elise McMullin. The 25-year-old Washington paralegal plans to join an investment club with a dozen friends. They each will pool at least $20 a month to buy stocks they will research themselves.

"I think that for many people the stock market is such a mystical and confusing thing, and it is for me too," she soberly admits. Then why bother? "I really don't believe Social Security is going to be any kind of security for my future."

That a bull market so spectacular in magnitude should be greeted with so much angst and apprehension, and generate so little overt excitement, marks a strange chapter in the American economy and sets this powerful move in stocks apart from surges in the mid-1980s, the 1950s and '60s, and the 1920s.

Certainly it feels better to be richer than not, a fact that the record number of American shareholders would be unlikely to dispute. But many analysts say the unprecedented circumstances from which this bull market has arisen go a long way toward explaining its inability to stir significant passion on Wall Street or Main Street.

It can be argued that stocks in the 1990s are rocketing for all the wrong reasons: Strong corporate profits achieved at the expense of workers' job security; falling interest rates that reflect an anemic economy, and, most important, a record and rising level of investment by aging Americans who own stocks not necessarily because they want to, but because they feel as if they have no choice--with retirement approaching and stocks universally touted as the only true path to financial security.

Even as recently as the 1980s bull market, many investors were still confident about their job and reasonably certain that their home's value would appreciate substantially over time. Those hopes have since faded for millions of Americans.

"People are being forced to be speculators" in stocks, contends Ricky Harrington, a veteran market analyst at the brokerage Interstate/Johnson Lane in Charlotte, N.C. "They really do not know what they're doing."

Mutual Funds

There are, of course, many Wall Street professionals--and individual investors--who beg to differ.

"I like owning a piece of the economy," says 54-year-old Angela Jackson, a member of the Pacific Mermaids Syndicate investment club in Oxnard.

Since November 1994, the club's 15 members have been pooling their money--$50 a month each--to buy such stocks as McDonald's Corp. and drug maker Merck & Co. Jackson and her husband, Ron, a self-employed attorney, have no corporate pension fund to count on, so she admits that investing has become a necessity, not a luxury.

Even so, she says: "I really have faith in the companies I own. And I like checking on them."

That direct connection between investor and corporation was the norm in past bull markets, and accounted for much of the emotion and excitement that characterized those markets.

"We got a lot of fun out of buying stocks in the 1960s and '70s," says Stein Roe's Kugel.

Individual issues such as Xerox, Eastman Kodak and International Business Machines dominated cocktail-party chatter in the late 1960s, reflecting a heady time of tremendous optimism about the U.S. economy. Americans were going to the moon, and so, it seemed, was the stock market: From June 1962 to November 1968 the Dow index rose from 536 to 985.

"People used to sit in brokerage offices, watching stocks" on the electronic ticker-tape that was standard in many such offices then, Kugel recalls. Today, "you hardly see chairs in brokerage" lobbies, he says, only half-joking. "They don't want people sitting around."

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