
DATE: Wednesday, October 29, 1997           TAG: 9710290661

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY LON WAGNER, STAFF WRITER 

                                            LENGTH:  132 lines

DOW RISES ON TURNAROUND TUESDAY IBM, SMALL INVESTORS LEAD REBOUND ON WALL STREET

Big Blue and the Little Guy are being credited for Tuesday's record 337-point turnaround of the sinking stock market.

The Dow Jones industrial average followed Monday's worst-ever one-day point drop with its best-ever one-day point gain.

Big Blue - International Business Machines Corp. - announced a massive stock buy-back Tuesday morning, even as the market sagged another 100 points on top of Monday's 554-point drop.

IBM announced it would buy $3.5 billion of its own shares, a move that boosted confidence in the market.

Then there was the ``Little Guy,'' the individual investors whose nerves in the face of falling stock prices were exemplified by Carl Rickards. Tuesday morning, Rickards popped into the Virginia Beach office of his Scott & Stringfellow broker, Larry Waters.

``I don't know why anybody gets all panicky,'' Rickards said. ``I bought Microsoft and it's still 28 points higher than when I bought it.''

The Dow's Monday drop of 7.2 percent was the 12th-worst in percentage terms in history. Financial pundits Monday night set the scene for Tuesday by saying it would be the first real test for many small investors, who had jumped into the market at various times over the past seven years as the market went up, up, up.

Would the investor who scraped a savings account dry to buy 100 shares of a company be able to stand and watch those paper proceeds slip away? And was there any money that hadn't already been put to work in the aging bull market?

George Shipp, an analyst at Scott & Stringfellow's Norfolk office, got an inkling of the answer first thing Tuesday when he checked in the brokerage's wire room.

About 100 orders were waiting: 95 orders to buy stock, only five to sell.

``With the Dow down 13 percent since August, there's a lot of companies that are down 20 to 30 percent,'' Shipp said. ``That brings out the bargain hunters.''

With the close today, the Dow is 760.99 points, or 9.2 percent, below its Aug. 6 record of 8,259.31.

For perspective, though, the Dow's close today at 7,498 is 16 percent higher than it began the year.

The Dow recovered from a rough start Tuesday. In the wake of news that Hong Kong's index of blue chip stocks fell 13.7 percent overnight, the Dow fell as much as 178 points and dipped below 7,000. But the Dow and the technology-heavy Nasdaq market recovered. The Nasdaq rose 67.93, up 4.3 percent to 1,603.02.

The Standard & Poor's 500 gained 44.26, closing at 921.25.

Tuesday's New York Stock Exchange volume of 1.2 billion shares smashed Monday's record volume of 685.5 million shares. It also caused uncertainty for brokers trying to lock in shares at prices that their clients considered bargains.

The record volume meant as much as a one-hour wait on the stock exchanges' floors in New York as traders stood in line to execute orders, said Monroe Nash Jr., vice president at A.G. Edwards & Sons Inc.'s office in Norfolk.

In a volatile market like this week's, the wait meant that a stock could rise or fall by a point or more between the time the order was placed and the time it was executed.

``That's probably our greatest discomfort at the moment,'' Nash said during the frenzy Tuesday afternoon. ``It's not customers beating up on us. It's sitting here wondering whether the orders have been executed and at what price.''

Nash, Waters and other area brokers spent Monday evening not holding the hands of their clients, but telling them to prepare ``wish lists'' of companies that they would like to buy at lower prices.

To be honest, Nash said, most of those clients did not buy shares Tuesday morning as prices initially headed downward. Nor did they sell.

Nash said A.G. Edwards' top analyst had ``been screaming buy since midday'' Monday.

``They say the time to buy in the market is when you feel like throwing up on the desk,'' Nash said. ``We just about got to that yesterday. It was the opposite of Mr. Greenspan's `irrational exuberance.' It was irrational pessimism.''

But the small investor stood firm, Nash said. He could recall only one person placing a sell order during the past three trading days, and that was someone selling bonds to buy stocks.

Waters said he had only one seller, and that was a man who couldn't risk his stock market gains because he planned to buy a house with the money.

Many of Waters' callers, though, were disappointed because they had failed to buy as stock prices fell Tuesday morning.

``A lot of them are hating themselves now,'' Waters said. ``I'm just thankful it's coming back. I say, `It's not like you guys aren't invested. You shouldn't be praying for it to go down.' ''

George Hamar, a Virginia Beach retiree and former stock broker, would agree with that. Hamar didn't jump into the early week tumult, but he did watch it closely. He said he would continue the slow-and-steady investment approach he has used for years.

He owns shares of several regional banks, and on the first of every month he buys shares in a particular bellwether technology company. He'll wait until Nov. 1 and buy more shares.

Hamar is one of many who believes a prolonged drop in the stock market could send the country toward recession. Even though many people only have paper profits, he says, it gives them a cushion and makes them feel good about buying.

``You feel poorer,'' Hamar said. ``Just like you feel richer when you got all this money in the market. You feel like you can go out and buy a new car.''

And when the market plunges, as it did Monday?

``You sit and sweat,'' Hamar said. MEMO: Staff writer Christopher Dinsmore contributed to this report. ILLUSTRATION: Graphic

Color photos

The Dow Jones industrial average rose 337 points on Tuesday, fueled

in part by individual investors who stayed put and invested more in

the market.

Some local views

``A lot of them are hating themselves now (for not buying

Tuesday). I'm just thankful it's coming back.''

Larry Waters, at the Virginia Beach office of Scott &

Stringfellow

``They say the time to buy in the market is when you feel like