'Little guy' may be getting back to the stock market
Is the public developing a new love affair with the stock market? Although it may not be a full-blown romance, the people's interest is at least more than a flirtation. And there has been a definite improvement over the 1970s, when the individual investor was turned off by a succession of bear markets, leaving the stock market to pin-striped bankers and pension fund managers.
ing money," says Teddy Sharp, a floor trader on the American Stock EXchange.
Statistics compiled by Merrill Lynch, Pierce, Fenner & Smith Inc., the brokerage house, confirm Mr. Sharp's belief. Earlier in the year individuals were net buyers of stock, a spokesman says. Recently, individuals have been selling into the rally, taking profits. On the whole, the spokesman says, "in conversations with our branches there is a marked increase in interest in the market."
At Merrill Lynch alone, says Michael Wall, director of advertising, the number of active retail accounts has grown in two years from 1.5 million to 2 million.
Individual interest in the stock market is also easily seen at the Merril Lynch investment center in Grand Central Terminal.
In a glass-enclosed booth, referred to as "the tomb" by Merrill Lynch brokers , Helen Koik, an "exhibit specialist," sits five days a week in front of a series of screens displaying various market trends, the Dow Jones industrial average, the ticker tape, and Merrill Lynch's own opinion on various stocks. At the same time, men and a few women line up to push the buttons on machines that give the latest prices on their stocks and bonds. At lunchtime the quotation machine line can stretch past the Conrail information booth, sometimes prompting people to wait in line at Merrill Lynch to try to find out when the next train to Stamford, Conn., leaves.
On an average day, according to a Merrill Lynch survey done five years ago, 3 ,500 to 4,000 people walk into a booth that is roughly 20 feet square and retrieve stock information. If the market is active and either sharply up or down, the crowd gets larger. If it's a lazy trading day, the Merrill Lynch account executives, who are there to both answer questions and pick up new accounts, end up talking to one another. Merrill Lynch brokers call the booth "an absolute barometer for the market."
On a recent Friday, John Liu, who has been a registered representative for one wek, is "prospecting" for customers. Mr. Liu, a native of Taiwan, immediately strikes up a conversation in Chinese with another Chinese, who was waiting to use the quote machines. Before the man leaves, he has Mr. Liu's card tucked in his wallet.
"Ethnic groups sometimes feel more comfortable speaking their native languages." says Miss Koik, who also speaks fluent Estonian.
For the most part, the spectators are content to watch the tape and get stock quotas from the machines. But sometimes they actually impart information or have some stocks to buy or sell.
Rene Hanley, who was known as the mayor of Grand Central during her five- year stint in Miss Koik's current position, says that over the past five years there has been a resurgence of interest in the market at the terminal. Another change has been an increase in the number of interested women and young people, she notes.
What kind of questions do investors have today?
Miss Hanley says that people are still mainly concerned with "preservation of capaital," that is, not losing money. On this count, she says, the biggest draw is still the money-market funds. These are nowadays yielding over 9 percent.
When investors ask about stocks, she says, they are mainly looking to gold issues, high-technology stocks, and options. Just this past weeks, Miss Koik says, the interest has been in a new issue called Genetech, which specializes in biotechnology. And naturally, everyone is interested in Apple Computer, which is supposed to be going public shortly.
The investors who frequent the Grand Central booth will soon have a surprise: It will be closed for the month of November to undergo a complete renovation. The new booth won't be much different from the old one, although the Merrill Lynch bull might be a little larger and a little more prominent.
When informed of the booth's month- long closing, one of the many "regulars" who visit the booth to watch the market predicted the closing will precipitate a real sell-off in the market. But another regular decided that the closing would just chase the tape-watchers over to the board that displays the train arrivals and departures. His reasoning: People will watch anything while they're killing time.
Last week in the market, there was a lot of commotion but very little movement. Stock prices roared up in the beginning of the week and then fell back at the end, with the Dow Jones industrial average closing at 950.68, unchanged for the five-day trading period. Volume was relatively active.
Even though interest rates eased because of a drop in the money supply and a subsequent easing by the Federal Reserve Board, there was still some anxiety in the debt and stock markets. This wasn't helped when Citibank kept its prime interest rate at 14 percent while almost all the other banks remained at 13 1/2 percent.
Tension in the Middle East still hadn't eased and investors at the end of the week were wary about holding positions during the trouble.
With the Democrats whistling "Happy Days Are Here Again" as they barnstorm around the country, some investors may get a little nostalgic for the "good ol' days."
Those days have been re-created -- at least in song -- by Book-of-the-Month Records, a division of Book-of-the-Month Club Inc., in a new record entitled "Songs of the Depression." For history buffs, says George Spitzer of the record division, it's worth remembering that "Happy Days" was recorded on Black Tuesday , Oct. 29, 1929, the day the market crashed. There is even a hit for economists: "Dancing in the Dark."