Business: Victims of the Fall

THE stock market’s $100 billion decline since mid-May has wounded every kind of investor—amateur and professional, neophyte and veteran, racy speculator and wary conservative. The psyche has been hurt as badly as the pocketbook, and the pain of loss is sharpened by the thought of what might have been. Though every investment is a risk, more investors than usual are furious at their brokers for having talked them out of selling last spring, when they could have cashed in rich profits.

Thurmond Shaddix, a bank clerk in Atlanta, bought the stock of a machinery-parts manufacturer, Breeze Corporations, at 20. When the shares hit 37 in May, he asked his broker if he should sell. The broker advised holding for larger gains. The price has since dropped to about 14, giving Shaddix a 30% loss on an investment that once showed an 85% profit. “I’m really burned about that one,” says Shaddix, who also has a small loss in some blue chips.

Sour Tips. Quite a few investors protest too much. “I’m wiped out, man,” says Larry Thomas, 26, an Atlanta insurance agent. In fact, he has a profit. The computer stock that he bought at 12 on a tip from a friend now sells at about 141, and his $9,600 initial investment is worth around $11,600. That, however, is less than one-third of the $37,600 he counted on paper last spring, when the stock briefly touched 47.

For others, the losses are all too genuine. A Portland, Ore., printer borrowed heavily to buy a new issue of a computer manufacturer at 5. When the stock dropped to 21, his loan was called, forcing him to sell. Altogether, he lost about half of his $2,000 investment. Sylvan Fry, 53, a manufacturer’s agent, began investing for the first time last winter, buying oil, chemical and computer issues. On paper he has already lost $6,500 of the $11,400 that he started with. George Ratliff Jr., 39, a Pittsburgh steel-company engineer, began 1969 with a portfolio worth $16,900, has seen its value drop $2,500. He describes himself as a “fundamentalist” who invests only in securities that he thinks offer sound values. Among his losses: $1,000 in Gulf & Western convertible bonds that he bought because he considered them “a perfect hedge against a falling market.”

The professionals have fared no better. George Miller, senior vice president of the San Francisco firm that manages the $544 million Commonwealth Group of Mutual Funds, encourages his analysts to invest with their own cash. “Virtually without ex ception, they are losing money now,” he reports. Dr. Shannon Pratt, director of the Portland (Ore.) State University Investment Analysis Center, estimates that the value of his own stocks has dropped 23% since May—a period during which the Dow-Jones industrial average has gone down 15%. He invests largely in over-the-counter stocks, which rose faster than most listed shares during the bull market but dropped more sharply during the current slide. A young stock salesman for a San Francisco brokerage house is so discouraged by his own losses that he says, “I don’t think I’ll ever buy any stock again.”

Growing Worry. Anxieties are growing among investors who are old enough to remember the 1929 crash and the Depression. A 49-year-old Akron trucking executive has lost only $1,000 on a $20,000 investment in four blue chips—U.S. Steel, Ohio Edison, Goodyear and Standard Oil (Ohio). “But I had a fear of the market from the start,” he says. “So do most people who saw their families struggle through the Depression. Now I feel like digging a hole in the backyard and burying the dough.”

There is little such fear on the part of younger people. They are members of the confident generation, which has known only good times. Many investors are heeding brokers’ advice to hold on and ride out the difficult period. “Hell, I’ve got no choice,” says an Akron rubber-company executive who early this year sold all his previous holdings and put the proceeds into Nuclear Corporation of America at 5 and Aero-Flow Dynamics at 14. Last week Nuclear sold as low as 41 and Aero-Flow dipped under 12. Says the executive: “I can’t sell. I can’t afford the loss.” Besides, he adds, “The market is bound to start up—maybe this week. I would go back into the market right now if I only had some money.”

A few investors missed the market slide. An Atlanta woman sold her stocks in May and put the $23,000 proceeds into underdeveloped land. “I won’t have to worry about it every day,” she says. Thomas H. Chmielewski, 29, a business planner at General Electric in Manhattan, has minimized his losses by buying in the Japanese stock market as well as on Wall Street. Last spring he put $6,000 into Nomura Securities Co., an investment banking house, and $4,000 into Ikegai Iron Works, a machine-tool company. Ikegai has risen slightly; Nomura declined, but nowhere near as much as the U.S. securities that Chmielewski holds.