Investors Now View the Stock Market With Less Greed and Much More Fear
After five years on Easy Street, investors are in limbo, and stocks are no longer a sure thing.</br></br>Since the Oct. 19 crash, stock prices have had trouble getting above 2000 on the Dow Jones Industrial Average again. And yesterday, in response to a slide in the dollar, the Dow tumbled 56.70 points to 1942.97. The broad effect of the October market rout, like other historic bear markets, seems to be in reviving habits of viewing stocks with less greed -- and more fear.</br></br>Pre-crash talk of the Dow soaring to 3600 next year has evaporated. Instead, many money managers are hoping for a brief New Year's rally to enable them to unload money-losing debris. Even optimistic professionals see room for only modest gains in the next couple of years. Some are pulling back from stocks altogether, while others are avoiding the speculative stars of a few months ago. People still willing to buy equities are looking for export-oriented companies, battered growth stocks, or "defensive" issues that could hold up if a recession hits.</br></br>"The knowledge that stocks can fall so far, so fast" will change investment behavior for a long time, says Jeremy Siegel, a Wharton School finance professor.</br></br>In addition, many people fear that another crash could entrench a bear market for years. Historians note that it wasn't the 1929 crash that killed the market nearly 60 years ago but a second collapse in 1930 that really clobbered stocks -- and the world economy.