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[nihilnovum]

Real Americans don`t flee the market
Commentary: U.S. investors have turned into wimps

By Chris Pummer, CBS.MarketWatch.com
Last Update: 4:00 AM ET April 24, 2002




SAN FRANCISCO (CBS.MW) - When a plane crashed into a Milan skyscraper last week, American investors did what comes naturally to them lately - they turned and ran for cover.





Fearing an act of terrorism, they sent the Dow tumbling 163 points before changing the Depends diapers they wear lately for stress incontinence and sending the index back up once it became clear it was not déjà vu all over again.

Forget that it made no sense that terrorists given to grand-scale destruction of the World Trade Center and the Pentagon would send a small plane into a local government building in Italy, even if Milan was on an Easter warning list. U.S. investors look for any excuse these days to act on their fear, and it`s becoming a national embarrassment.

"I can`t remember when I`ve seen investors so skittish, constantly second-guessing themselves," said Richard Geist, head of the Institute of Psychology and Investing and publisher of an investing newsletter. "They`re hyper-vigilant and overly sensitive to things that ordinarily you really wouldn`t bother with."

In contrast, consider how Israeli investors have reacted to the almost daily suicide bombings within their own borders. Surely, if any investors might rightly succumb to fear, it would be those in the most strife-torn spot on the globe right now.

Yet Israel`s tech-heavy stock market, as measured by the Tel Aviv 25, has fallen just 13.4 percent since Jan. 1. That`s only slightly more than the Nasdaq`s 11.3 percent drop this year.

How do Israeli investors maintain their resolve? Sure, they`ve grown accustomed to decades of terrorist onslaughts, but they also have an undying belief, which Americans seem to sadly lack lately, that their country will ultimately prevail.

"Israelis are used to bad news, and they know tomorrow is another day," said Boaz Rahev, an investment counselor for Bank Leumi USA. "Everyone knew when the U.S. markets reopened Sept. 17, it was the time to buy, but only a few people acted on that. Now is the time to buy, too."

Consider as well Argentina. Its economy is in tatters and its people have survived on various forms of script that are essentially IOUs. Makes 5.7 percent U.S. unemployment seem like a walk in the park.

Yet Argentina was the top performing stock market in the world in the first quarter, returning almost 50 percent. In dollar terms, its stock market fell 12 percent, but that takes nothing away from Argentine investors faith in a coming turnaround.

American investors, meanwhile, have become spineless, so haunted by the Ghost of Losses Past that they ignore all the good news that the Spirit of the Stock Market Yet to Come is offering them.

"There are a lot of positives that people are just not paying attention to," Geist said. "Everything would indicate investors should be getting back into the market. Instead, people are frozen like deer in a headlight."

Certainly, the plane crash in Queens shortly after the Sept. 11 attacks was cause for investor alarm. Yet since that day in September, when we assumed every plane hitting a building was an accident, now we assume it`s a terrorist attack.

Our whole world view has become jaundiced as a result, even though the world is a far safer place than when a nuclear threat was ever-present and schoolchildren nationwide were taught to "duck and cover."

The Middle East crisis has become investors` latest excuse to run scared, following 9/11 and Enron`s shattering of faith. We seem to ignore that Arab nations once divided along superpower lines called a swift peace summit to resolve a long-brewing and now-deadly personality clash between two lifelong protagonists - Israel`s Ariel Sharon and the PLO`s Yassir Arafat.

And so how do U.S. investors react? The paranoids among us advise running to gold, when gold remains what it has become of late, the preferred investment of freaked-out survivalists. It`s been virtually the worst investment in the world for nearly two decades, and a 10 percent jump in gold prices this year won`t make up for what a bad investment it`s been, and will continue to be, once the smoke clears.

U.S. investors are bailing out first and asking questions later. Fear drives them to sell, and a fear of missing out on the upswing drives them to buy. They`re often getting back into the market at the same point they exited - and losing ground on the cost of two trades.

Where they were irrationally overconfident before March 2000, they`re chronically under-confident now. They`re in dire need of spinal implants to restore their backbones and testosterone injections to stiffen their resolve.

The still easier remedy: Scout out two promising, small-cap growth stocks and call your broker in the morning.



So soll es sein. Augen zu und durch, ihr seid die Größten!

Dream on, little dreamer.Welcome to reality.Eure Schulden
werden euer Untergang sein.

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Es brummt in AFRIKA !
gruß
andy