Interesting read..
I hope all here can find comfort with loved ones during this time of National mourning..
By Karen Talley and Donna Fuscaldo
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- A grassroots effort is growing among traders, investment strategists and money managers to prevent the stock market from selling off when it reopens on Monday.
The effort is informal, consisting largely of phone calls and e-mails between colleagues and postings in professional chat rooms. It could add up to something significant if the spirit is carried through, say those involved.
"This is about not taking advantage of a disaster," said Jim Dunigan, chief investment officer at PNC Advisors. "The goal is stability for the market."
Indeed, the big fear is that the uncertainty caused by Tuesday's attack on the World Trade Center will cause massive selling once the U.S. stock market reopens. Right now regulators are aiming for the opening to occur on Monday.
Dunigan said he has been talking with colleagues at other investment firms about holding back on measures like program trading, "so as not to upset the market's fragility at this time."
Program trading, a tool used by arbitrageurs and institutional traders, can cause massive moves in stock prices through computer-driven buying or selling of baskets of stocks.
"Program" refers to the computerized monitoring that occurs to detect and then take advantage of hiccups in the market ahead of other investors.
The practice has been cited for causing excessive volatility and contributing to the 1987 stock market crash. While restrictions have been put in place since then, the approach can still have a great impact on the market's direction, analysts say.
Short selling is another practice that can measurably move stocks lower, as traders take positions in anticipation that stocks will fall. That practice is being frowned upon by some right now.
Pacific Equity is a big short seller, but is dispensing with the practice until the market settles down, said the firm's principal, Anthony Elgindy.
"I'm sure I could make a lot of money if the world panicked," Elgindy said. "But I'm not convinced that's a business philosophy I want to employ."
Traders are also urging their colleagues not to short stocks and also cover short positions on Monday. This has been a focus of discussion in the chat room of the Market Technicians Association, a group that counts traders and investment strategists among its members.
"When the New York Stock Exchange opens, we and our clients will not execute any sell programs, nor sell short any stocks trading on any market worldwide," one posting said. "You have our permission to pass this information along to others."
Some money managers say they plan to buy stocks or at least hold on to their positions when the markets opens.
Take Alex Motola, portfolio manager at Thornburg Management, in Santa Fe., N.M. Although Motola said he may do a little bit of selling on the margin, he plans to be a net buyer.
"A lot of American people are going to step up and lead a market intervention," Motola said. "People feel the right thing to do is to buy stock, support the economy and be defiant in the face of terrorism."
Marty Shagrin, technology research analyst at Cleveland-based Victory Capital Management, expects investors as well as corporations to support the markets. He added that his firm doesn't have any sell recommendations coming in for Monday's open.
But others are noncommittal. Chris Kaufman, a managing director and portfolio manager for the BlackRock Funds, says he wants to get a sense of how the market moves initially before acting. "We'll look and see what prices might be advantageous to us as a buyer or seller," Kaufman said.
Indeed, there are some considerations that may weigh on a showing of solidarity, even the patriotism of buying stocks. Stephen Poser, a member of the Market Technician's Association and president of his own investment advisory firm, is with the move in spirit but questions whether it is doable.
"First of all, not everyone in the U.S. stock market is an American and money managers have a fiduciary responsibility to do what they can make money for their clients or protect them from losing it," Poser said.
But if corporations get behind the effort stocks could move up. Cisco Systems is stepping up to the plate, saying on Thursday that its board authorized a stock buyback program of as much as $3 billion, in an apparent symbolic move.
Cisco Chief Executive John Chambers said the company has "tremendous confidence in the financial systems of our country, in our industry and in our market-leading position."
And individual investors say they want to do their part. In chat rooms across the Internet they spoke of their commitment.
One poster on MSN's MoneyCentral message board said "many average Americans are asking what they can do to help. When the stock market opens on Monday, they should invest in our Country."
The posting added that "by investing in America, we can show the world that though the World Trade Centers were destroyed, the beacon of world trade is not. Stand up in the face of adversity by buying a piece of the greatest nation the world has ever known."
On one of Yahoo's message boards another poster said "as the markets open the world will be watching to see if the US economy is going to fold like the legs on an old card table or whether America is made of sterner stuff. Here's what I'm doing. I have buy orders on five stocks, although they are not big orders. I will not sell anything. If these stocks lose money so be it. I really don't care."
The thing is, stocks might have lost money even without Tuesday's attack. The economy is wobbly and that was reflected by the Standard & Poor's 500 Index and the New York Stock Exchange Composite Index closing at three year lows the week before the attack.
But some see the tragedy providing fiscal and monetary stimulus in the form of interest rate cuts, military spending and reconstruction spending.
Indeed, it may well be in investors' best interest to be bullish come Monday.
"History has shown each prior event-driven selloff to ultimately be a buying opportunity," said Jordan Kimmel, president of Magnet Investment Group.
(This story was originally published by Dow Jones Newswires)
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved
_______________________________________________________________________
