Tiptoeing Back into the Market

Irwin Halper, 35, the part-owner of a paper-goods company in New Jersey, put his money into tax-free bonds for several years and, more recently, into All Savers Certificates to take advantage of high interest rates. With the stock market shooting up, Halper last week called his stockbroker at Shearson/American Express and placed a buy order. Said he: "The yields were no longer attractive, so I decided to buy about $35,000 in blue-chip stocks." Millions of small investors left the market in the long bear market of the early 1970s, but many of them are now coming back, slowly.

In Red Oak, Iowa (pop. 6,800), Stockbroker Winfield Mayne's customers are keeping him busy twelve hours a day with requests for tips and quotes. Says he: "I think the more sophisticated investor here knows he missed the first run-up in August, and he doesn't want to miss this one too." Says C. Derek Anderson, president of his own discount brokerage in San Francisco: "Most definitely the little guy has come back into the market."

Trading in 100-share blocks on the New York Stock Exchange, one frequently used measure of small-investor activity, accounted for 10.5% of all orders in April 1973, but by last August it had slid to 1.7%, a historic low. In September, however, small-block trading turned significantly upward for the first time in more than two years.

Nonetheless, many individual investors continue to wait on the sidelines. Some are even taking advantage of the high prices to sell shares. Says William Rajsky, a Merrill Lynch account executive in Peoria, III.: "This is not the usual market. The little guys aren't buying, they're selling." Fred Fraenkel, director of investment strategy for E.F. Hutton, who analyzes the habits of his firm's 850,000 customers, agrees. Says he: "So far the buying orders have come almost exclusively from institutional and foreign investors. The cash customer, on the other hand, has been a net seller."

The heavy losses suffered during the early '70s still haunt many investors. Lee Astorino, 34, a gardener in Hawthorne, Calif., began buying stock in 1972, and he even picked a few winners for a while. But the value of his holdings in American Airlines fell from $28 to $7 a share by 1974, and he lost thousands of dollars. After the latest rally began earlier this month, Astorino decided to take another plunge. He paid $4 each for 200 shares of Photo-Control Corp., a maker of specialty camera equipment. As the market gyrated wildly last week, Astorino was very nervous. Said he: "I'm just a little guy who can't afford to lose a lot. I see no reason for the market to go up, but thank God, that's what it's doing."

This file is automatically generated by a robot program, so viewer discretion is required.