As the stock market's losses piled up last year, brokerage executive Charles Schwab began appearing in TV commercials urging individual investors to remain calm.
It's advice not many seem to be heeding.
"You can start to see people get a sense of panic now," Schwab said of Wall Street's latest dive. "You see it in the market, you [hear] it in conversation, you see it in the writings to the letters to the editor. For some investors, it's getting pretty desperate. Of course, that's the time you just got to hold your cool."
Remaining levelheaded is getting tougher for individual investors caught in the maelstrom of accounting scandals, terrorism fears and economic queasiness that last week shoved the stock market to its lowest levels in nearly four years.
Logic says the market should be reaching a bottom, that today should yield great deals for investors with extra cash and the desire to buy blue chip stocks deeply discounted by the waves of selling that have washed over Wall Street.
But emotions might drive even more people out of the market as they ruminate over the losses reflected in their second-quarter investment statements and realize the damage got even worse in the last two weeks, when all of the stock market's bellwether indexes were badly battered.
Since July 5, the Dow Jones Industrial Average got hit the hardest, falling by 1,360 points, or 14.5 percent, to 8,019 by Friday. Meanwhile, the Standard & Poor's 500 index shed 141 points, or 14.3 percent, and the technology-driven NASDAQ composite index dropped by 129 points, or 8.9 percent, by Friday.
The rapid descent, combined with substantial erosion that had already occurred since the stock market's March 2000 peak, is bound to cause a lot of soul searching among investors, said Tom Lydon, president of Global Trend Investments in Newport Beach, California.
"There are going to be a lot of couples sitting across from each their dining room tables this weekend and one spouse is going to say to the other, `That's it. We've had it. Let's get out of the market and take something off the table while we still can.'"
This kind of behavior is known as capitulation -- a phrase used in the stock market to describe a time when exasperated investors throw up their hands and sell all their holdings no matter what the economic circumstances might be.
The reaction is the polar opposite of the giddiness -- famously described by Federal Reserve Chairman Alan Greenspan as "irrational exuberance" -- that propels markets to staggering highs.
Historically, the moment of investor capitulation heralds the end of a bear market. That's the good news. The bad news is no one really knows when the moment of capitulation occurs.
"I've been thinking the market had capitulated for the last three weeks, but it just keeps capitulating," said Richard Del Monte, an investment adviser in Danville, California. He said three more of his clients threw in the towel after Friday's sell-off and told him to sell all their stocks.
Most money managers think this is a time savvy investors should be seeking out bargains. "You might see opportunities out there that you won't see again for years," Lydon said.
But don't tread into the market turbulence unless you have a cast-iron stomach: Investment professionals warn the market might plummet even further in the next few days.
"To buy stocks now, you have to be like the people who traveled across the country during the Gold Rush of 1849. It takes a lot of courage," Del Monte said.
Canan Korustan of Alamo, California, is already on the prowl for bargains. During Friday's sell-off, she picked up stock in General Electric and discount retailer Target. If the market falls further Monday, she is eyeing investments in drug company Pfizer Inc and perhaps a cable company. By buying now, she hopes to offset some of her losses on her past investments in high-tech companies.
US President Donald Trump yesterday announced sweeping "reciprocal tariffs" on US trading partners, including a 32 percent tax on goods from Taiwan that is set to take effect on Wednesday. At a Rose Garden event, Trump declared a 10 percent baseline tax on imports from all countries, with the White House saying it would take effect on Saturday. Countries with larger trade surpluses with the US would face higher duties beginning on Wednesday, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (25 percent), Vietnam (46 percent) and Thailand (36 percent). Canada and Mexico, the two largest US trading
ACTION PLAN: Taiwan would expand procurement from the US and encourage more companies to invest in the US to deepen bilateral cooperation, Lai said The government would not impose reciprocal tariffs in retaliation against US levies, President William Lai (賴清德) said yesterday, as he announced five strategies to address the issue, including pledging to increase Taiwanese companies’ investments in the US. Lai has in the past few days met with administrative and national security officials, as well as representatives from various industries, to explore countermeasures after US President Donald Trump on Wednesday last week announced a 32 percent duty on Taiwanese imports. In a video released yesterday evening, Lai said that Taiwan would not retaliate against the US with higher tariffs and Taiwanese companies’ commitments to
CHIP EXCEPTION: An official said that an exception for Taiwanese semiconductors would have a limited effect, as most are packaged in third nations before being sold The Executive Yuan yesterday decried US President Donald Trump’s 32 percent tariff on Taiwanese goods announced hours earlier as “unfair,” saying it would lodge a representation with Washington. The Cabinet in a statement described the pledged US tariffs, expected to take effect on Wednesday next week, as “deeply unreasonable” and “highly regrettable.” Cabinet spokeswoman Michelle Lee (李慧芝) said that the government would “lodge a solemn representation” with the US Trade Representative and continue negotiating with Washington to “ensure the interests of our nation and industries.” Trump at a news conference in Washington on Wednesday announced a 10 percent baseline tariff on most goods
‘SPECIAL CHANNEL’: Taipei’s most important tasks are to stabilize industries affected by Trump’s trade tariffs and keep negotiations with Washington open, a source said National Security Council Secretary-General Joseph Wu (吳釗燮) arrived in the US for talks with US President Donald Trump’s administration, a source familiar with the matter said on Friday. Wu was leading a delegation for a meeting known as the “special channel,” the Financial Times reported earlier. It marked Trump’s first use of the channel since returning to the White House on Jan. 20. Citing a source familiar with the matter, the Financial Times reported that Minister of Foreign Affairs Lin Chia-lung (林佳龍) was also a part of the delegation. The visit came days after China concluded war games around Taiwan and amid Trump’s