Heres the wall st journal..e-mailed to me by the editor..I am Donnie Yeagin..
Donnie,
Thanks for your time. It was a pleasure to talk to you, and stay in touch.
Aaron Elstein
October 13, 2000
On Internet Message Boards,
The Bulls Are in Hibernation
By MIKE ANDERSON, AARON ELSTEIN, STACY
FORSTER AND ANDREW FRASER
WSJ.COM
For one beleaguered investor, the only rational thing to
do on Thursday
was avoid a place called Raging Bull.
"I'm going into hiding for a
while," wrote the
investor identified only as
beacon031 on
Raging Bull (www.ragingbull.com),
one of
the most popular message-board
communities for discussions of hot stocks. "Lots of
emotions here and the
negativism is frankly bumming me out."
With the Dow Jones Industrial Average down nearly 380
points -- barely
above the vaunted 10000 mark -- and the Nasdaq down to
3074, its low
point for the year, Thursday wasn't a day for raging. It
was a day investors
struggled to deal with a range of worries, such as the
possibility of margin
calls from their stock brokers and what to make of the
market's tumble. Is
it time to fight the tide and buy or is it time throw in
the towel and sell?
On Internet message boards, where investors
share ideas, activity soared as the market
tumbled. At Silicon Investor
(www.siliconinvestor.com), daily posts were
90% higher than the site's three-month
average, said Jill Munden, a company
spokeswoman. In contrast, they were 25% higher during the
last plunge --
on April 14. But instead of the usual tips about hot
stocks, many posters
were searching for some cyber support.
Although it was continuing worries about corporate
earnings and escalating
violence in the Middle East that triggered the stock
sell-off, some investors
thought there were superstitious forces at work.
"I think years that end in zeros are never good years for
the market, and on
top of that you've got a presidential election to worry
about," said Kelvin
Taylor of Goldsboro, N.C., a regular participant on
Silicon Investor.
Some said October is just a cursed month. "I got really
hit hard in October
1997 and October of 1998," says Donnie Yeagin, of Austin,
Texas. "After
that, I decided that October is never a good month to be
in the market."
Amid the longest bull market in history, investors have
endured several
downturns, and October is a notoriously bad month. But
this time, they
weren't as quick to write off the crater in the market as
another buying
opportunity. The bears came out of hibernation on the
Internet.
"I've been investing in the market for 10 or 11 years,
and this downturn
feels different," said Mr. Taylor. "You usually get these
V-shaped drops
and recoveries, but here it's been a steady sell-off for
a while now."
The prolonged sluggishness in the stock market,
underscored by
Thursday's big drop, is souring the decade-long euphoria
on Wall Street.
"People who have made money over the last [10 years] have
been buying
on the dips, but the longer the dips prolong the less
confident people
become," said Stephen Franco, an analyst at U.S. Bancorp
Piper Jaffray.
Indeed, trading volume at online brokerage firms have
been dropping as
weakness in the market makes many investors cautious. Mr.
Franco
estimates average daily trading volume dropped 10% in the
third quarter to
950,000 from 1.06 million. The fourth quarter isn't
looking any better.
Despite heavy overall volume in the market Thursday, some
online
brokerage firms said their customers weren't unusually
busy. Online
investors tend to become paralyzed during dramatic
declines in the stock
market, preferring to jump in on big upswings, said Mr.
Franco.
Although he couldn't immediately provide any numbers,
Greg Gable, a
spokesman for Charles Schwab Corp., said trading volumes
at the firm
"were not particularly high" on Thursday. "For a market
of that sort, it was
a relatively quiet day. It was just a down market day,"
he said.
Nevertheless, the market's decline provided booming
activity at some
other firms.
Mike Quinn, vice president of electronic trading at
Suretrade, said volumes
have been up significantly in the last week, but Thursday
reached their
highest levels since spring. "We're probably up about 50%
-- back to our
first-quarter levels, where we were when the market was
booming," he
said. Suretrade completed nearly 10,000 trades a day in
the first quarter.
Allan Reagan, an investor in Round Rock, Texas, said that
volatility is the
risk every investor must now face.
"If you can't stand the heat, throw it over to a mutual
fund," said Mr.
Reagan, who posts message on Silicon Investor. "I'm down
substantially
for the year, but over the past two years I'm up
substantially."
However, a Silicon Investor member from Pompano Beach,
Fla. who goes
by the name of "Dealer," tried to be circumspect about
her declining
fortunes.
"I was a Qualcomm millionaire earlier this year, but
that's all gone now,"
she said. "I've learned there are more important things
in life than money --
the best things in life are free."
And Dealer was thankful that she didn't face one of
investors' most
common foes in a plunging market: a margin call. "I
learned my lesson last
year when the market tanked," she said.
A margin call occurs when the equity in the account of an
investor who has
bought stocks with money borrowed from his brokerage firm
falls below a
certain minimum. When that happens, the firm usually
demands that the
investor puts up more cash or securities to cover the
loan. If the investor
doesn't, the firm could sell securities from his account
to cover the debt.
But many investors didn't escape the dreaded margin call
Thursday.
Melissa Gitter, a spokeswoman for TD Waterhouse, the No.
4 online
brokerage firm, said it has seen an increase in margin
call activity that is
"commensurate with the dramatic movements" in the market.
Mr. Gable, of
Schwab, the No. 1 online broker, echoed those comments.
One interesting aspect of Thursday's drop is that it was
centered on the
Old Economy stocks that had been considered dependable
and almost
immune from the volatility that had become a normal
occurrence for
high-growth technology and Internet shares. Many online
brokers in the
past had tightened margin lending for some of those
volatile New Economy
stocks. But now, blue chip investors were the ones facing
the pain.
Mr. Taylor, the investor from North Carolina, said he
still trades every day
and still likes New Economy semiconductor stocks and
Cisco Systems
Inc. And though it was Home Depot Inc.'s earnings warning
on Thursday
that helped trigger the sell-off, he still likes
retailers. "I think Christmas
shopping will be good, so I'm buying the retailers."
Mr. Yeagin, from Texas, also does see a buying
opportunity in the
market's volatility. "It's given me a chance to step in
and out when
everyone else is selling like mad."
But buying or selling stocks on a whim is a strategy that
many financial
professionals try to discourage. Indeed, in previous
market routs, some
online brokerage firms have cautioned their
do-it-yourself customers that
investing is long term and that they should ignore the
market's wiggles.
Write to Mike Anderson at mike.anderson@wsj.com, Aaron
Elstein at
aaron.elstein@wsj.com, Stacy Forster at
stacy.forster@wsj.com and
Andrew Fraser at andrew.fraser@wsj.com
Aaron Elstein
Wall Street Journal
200 Liberty St.
New York, NY 10281
aaron.elstein@wsj.com |
