By Joseph A. Giannone
NEW YORK, May 6 (Reuters) - A fall of nearly 1,000 points in the Dow Jones Industrial average on Thursday struck fear in small investors, but financial advisers say for the most part their battled-tested clients did not panic.
Stocks plunged 9 percent to as low as 9,869 in the final two hours of floor trading, but quickly bounced back to close at 10,520 amid reports the decline was triggered by a trading error at a major firm.
The freefall followed a bearish day of riots in Greece and worries that sovereign debt woes may spread.
Jason Pride, director of investment strategy for Glenmede, a Philadelphia wealth manager with $18 billion of client assets, said the freefall was 'something to watch with concern. I wouldn't say we've had any dramatic reaction or panic here.'
The market sell-off came after more than a year of surging stock prices, as individual investors gratefully watched their portfolios recover much of the value lost to the 2008 global market meltdown.
Pride observed that even at its lowest point Thursday, the Dow was at levels seen in February.
A small sampling of financial advisers said their clients were better prepared for the sell-off, many having just watched their portfolios evaporate two years ago.
'A lot of clients are more mentally prepared for these giant swings. The lessons of 2008 have been learned,' said Alan Haft of Newport Beach, California-based Kings Point Capital.
'If you need your money in the short run, you shouldn't be in the market and if you're in for the long haul, they know you don't have to panic,' said Haft, whose firm manages about $700 million in assets.
If anything, Haft said, investors who have not re-balanced their portfolios, as stock holdings kept rising, may now be more prepared to take some profits.
Likewise Glenmede's Pride said many portfolios at his firm were positioned for choppy, sideways markets.
Roger Bair, senior adviser at Financial Consulate in Hunt Valley, Maryland, with about $200 million, also observed that his clients just emerged through a relatively volatile period.
'They bring that experience forward, and that experience comes with a certain level of confidence,' Bair said. 'They thought the world was going to end so they have voiced some confidence they can live through it again.'
The latest gut-wrenching drop, though, may drive some more volatility-weary investors out of the market.
'They really need to be reassured that we can once again rig the portfolios correctly so that we can make it through the gathering storm,' he said.
That said, Bair confided that the decline was upsetting to clients, who called seeking reassurance.
Robert Balentine, chief executive of Atlanta wealth management firm Balentine LLC, said the decline reflected a period of persistent volatility, where underlying economic fundamentals have not kept pace with rising stock valuations.
He said the firm, with $500 million in assets, is conducting quarterly client meetings and is focused on reducing risk and exposure, particularly to Europe. Another likely response to recent market volatility: focusing on opportunities in gold.
(Reporting by Joseph A. Giannone, Clare Baldwin, Joe Rauch and Helen Kearney; Editing by Gary Hill) Keywords: SELLOFF/SMALLINVESTORS (joseph.giannone@thomsonreuters.com; +1 646 223 6184; Reuters Messaging: joseph.giannone.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, May 6 (Reuters) - A fall of nearly 1,000 points in the Dow Jones Industrial average on Thursday struck fear in small investors, but financial advisers say for the most part their battled-tested clients did not panic.
Stocks plunged 9 percent to as low as 9,869 in the final two hours of floor trading, but quickly bounced back to close at 10,520 amid reports the decline was triggered by a trading error at a major firm.
The freefall followed a bearish day of riots in Greece and worries that sovereign debt woes may spread.
Jason Pride, director of investment strategy for Glenmede, a Philadelphia wealth manager with $18 billion of client assets, said the freefall was 'something to watch with concern. I wouldn't say we've had any dramatic reaction or panic here.'
The market sell-off came after more than a year of surging stock prices, as individual investors gratefully watched their portfolios recover much of the value lost to the 2008 global market meltdown.
Pride observed that even at its lowest point Thursday, the Dow was at levels seen in February.
A small sampling of financial advisers said their clients were better prepared for the sell-off, many having just watched their portfolios evaporate two years ago.
'A lot of clients are more mentally prepared for these giant swings. The lessons of 2008 have been learned,' said Alan Haft of Newport Beach, California-based Kings Point Capital.
'If you need your money in the short run, you shouldn't be in the market and if you're in for the long haul, they know you don't have to panic,' said Haft, whose firm manages about $700 million in assets.
If anything, Haft said, investors who have not re-balanced their portfolios, as stock holdings kept rising, may now be more prepared to take some profits.
Likewise Glenmede's Pride said many portfolios at his firm were positioned for choppy, sideways markets.
Roger Bair, senior adviser at Financial Consulate in Hunt Valley, Maryland, with about $200 million, also observed that his clients just emerged through a relatively volatile period.
'They bring that experience forward, and that experience comes with a certain level of confidence,' Bair said. 'They thought the world was going to end so they have voiced some confidence they can live through it again.'
The latest gut-wrenching drop, though, may drive some more volatility-weary investors out of the market.
'They really need to be reassured that we can once again rig the portfolios correctly so that we can make it through the gathering storm,' he said.
That said, Bair confided that the decline was upsetting to clients, who called seeking reassurance.
Robert Balentine, chief executive of Atlanta wealth management firm Balentine LLC, said the decline reflected a period of persistent volatility, where underlying economic fundamentals have not kept pace with rising stock valuations.
He said the firm, with $500 million in assets, is conducting quarterly client meetings and is focused on reducing risk and exposure, particularly to Europe. Another likely response to recent market volatility: focusing on opportunities in gold.
(Reporting by Joseph A. Giannone, Clare Baldwin, Joe Rauch and Helen Kearney; Editing by Gary Hill) Keywords: SELLOFF/SMALLINVESTORS (joseph.giannone@thomsonreuters.com; +1 646 223 6184; Reuters Messaging: joseph.giannone.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.