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The small investor returns

The "little guy" is back in the stock market in a big way and, as it turns out, is not so likely to be a guy. Women have rushed to buy stocks during the past two years, more than men. They constitute 57% of all new shareholders. The typical newcomer to ownership of stocks, in fact, is a 34-year-old woman with a portfolio worth $2,200.

Those were among the findings of a New York Stock Exchange survey made public last week. The study showed for the first time, with statistical conclusiveness, just how alluring the great bull market that began 16 months ago has been to typical investors. A record 42.4 million Americans now own individual stocks or shares of stock mutual funds, up a stunning 10.1 million from only two years ago. Nearly 75% of the newcomers had never owned stock. From July 1982 (a month before the bull began running) to June of this year, almost 5 million people became shareowners for the first time, vs. only 2.4 million during the twelve months before that. A record 18.1% of the populace is now in the market, compared with 14.4% in 1981 and a mere 11.9% in 1975.

Both new and old investors have had reason to cheer in recent weeks. The market's latest surge carried the Dow Jones industrial average from 1214.84 on Nov. 7 to a peak of 1287.20 last Tuesday, putting the widely watched indicator within a whisker of 1300. Profit taking caused the Dow to sag, however, and it finished the week at 1265.24.

Much of the market's continuing strength reflects the vitality of the economy. Last week brought still more good news. The Government reported that U.S. civilian unemployment dropped to 8.4% (or 9.4 million people) in November, a sharp decline from 8.8% the previous month and the lowest level since November 1981. The Commerce Department reported that its index of leading economic indicators grew a healthy .8% in October to record its 14th consecutive monthly gain. Moreover, major retailers reported such strong November sales that the current holiday shopping season could prove the best in five years. Says Edward Yardeni, chief economist for Prudential-Bache Securities: "There is plenty of justification in the economic news for the stock market's showing."

The imminent breakup of American Telephone & Telegraph into eight new companies has also bolstered trading. "It's an additional cause of increased enthusiasm," said William M. LeFevre, market strategist for the Wall Street brokerage firm of Purcell, Graham & Co. Indeed, gigantic swaps of A T & T stock set back-to-back records last week. On Thursday the sale of 5 million shares of "old" A T & T for $323.75 million surpassed the previous day's exchange of 4.7 million shares of the same stock. That added up to Wall Street's alltime richest dollar trade of a single issue.

The holiday season has been helping to boost investors' spirits. "There has been a rally of sorts every year at this time since World War II," notes LeFevre. Optimistic observers like Eric Miller, chief investment officer for Donaldson, Lufkin & Jenrette, are now predicting that the current upswing will push the Dow average far above 1300 and even past 1400 by the middle of the coming year. But the market's normal orneriness provides a note of warning. In 1966, the Dow hit 995. It did not close at over 1000 for nearly seven years. qed This file is automatically generated by a robot program, so viewer discretion is required.