Doctors at the William Beaumont Hospital in Royal Oak, Mich., faced an unusual emergency this week - a financial one.
Several of the physicians wanted to jump in and buy stocks after the "Great Plunge" in prices. But they couldn't get through to their brokers. "It was viewed as an easy killing by my colleagues," says David Poleski.
As their reaction shows, this week's turmoil in financial markets hasn't scared off small investors. Many remain cautious, aware that the golden bull market of the 1990s has entered an unpredictable new phase.
But that doesn't mean they don't see buying opportunities. Their cautious confidence reflects a growing sophistication by small investors in how to play the market - a trend that is changing the way Wall Street and, by extension, the world's financial markets, works.
"They have learned to buy on dips," says Philip Orlando, chief investment officer of the Value Line Asset Management.
Indeed, this week small investors flooded the market with enough purchase orders to help drive a 337-point rally on Tuesday. This marks a real change from the past when the small investor often got caught in the stampede.
Expectations have changed: Many small investors now harbor long-range views and see falling stock prices the same way bargain hunters see markdowns at the mall - as opportunities that can't be passed up.
Whether the strategy is successful may be critical to future capital markets. In the bear market of the early 1970s, small investors were beaten up so badly they remained on the sidelines for most of a decade.
In fact, many of the investors in the market today have never seen a prolonged bear market such as the 21 month slide of 1973-74.
"That could be quite devastating to an individual," says Ken Janke, president of the National Association of Investors in Madison Heights, Mich.
For this reason, some longtime market watchers are suggesting that individual investors scale back their expectations. They are calling the Monday slide of 554 points a wake-up call, a warning that billions of dollars in paper profits can disappear overnight.
"You can't count on 20 to 30 percent gains forever. Guess what, you can lose money," says Byron Klapper, managing director of Fitch Investors Service in New York.
Such warnings have been hitting investors with some regularity. Federal Reserve Chairman Alan Greenspan has warned about the "irrational exuberance" of the stock market. His warning, in December 1996, prompted Dr. Poleski to pull his money out of the market. "Now, I just buy old comic books," he says.
On Wednesday, Mr. Greenspan was at it again, describing the market's decline as as a "salutary event," particularly in terms of the economy.
The result: After Monday's drop removed about $1 trillion in household wealth and corporate capital from the US economy, Wall Street analysts now believe the Fed will not have to raise interest rates anytime soon.
"They can't raise rates in this environment," says Raymond "Chip" Mason, chairman of Legg Mason Inc., a Baltimore-based brokerage house.
But if the market losses continue, they may also sap consumer spending. DRI McGraw-Hill, a Lexington, Mass., economic forecasting group, estimates consumers spend about 3 to 4 percent of their wealth over the course of a year. A loss of $1 trillion would subtract about $40 billion from consumer spending.
"This is not a trivial sum, but it is less than 0.5 percent of GDP," says the forecasting service.
As Wall Street sorts through these changes, Mr. Mason says his brokerage house is warning investors that the period ahead will be "erratic." He predicts the market will be up in a year or two, but "it's hard to guess what it will do between now and then."
If Mason is correct, small investors may yet have their mettle tested. This might cause problems for Philadelphia dietitian Phyllis Liebert, whose stockbroker sister calls her twice a week with tips. "If it doesn't keep rebounding, I'll be asking my sister a lot more questions," says the babyboomer.
Joey Infante's portfolio
Already the market's gyrations have scared Manhattan hairdresser Joey Infante. While he is soon expecting to have enough money to invest, he doesn't want any risk.
"I want to play the safe market," he says.
But Rick Vance, a health-care executive in Louisville, Ky., isn't fazed by the recent fluctuations. He has some investments in a 401k (retirement program) and in mutual funds, but much of his money is invested in stocks. "The economy's fundamentals are so sound," he says. "There's no reason to get nervous." As long as unemployment stays low, he's staying in the market.
Compton Belle, a small business owner in Mt. Vernon, Va., isn't shaken either. "It doesn't matter what happens today because I'm in for the long term," he says. He has part of his money invested in General Electric. "The day GE goes broke, America will too," he says.
Advisers say taking such a long-term perspective is essential. Jill Gianola, a financial planner in Worthington, Ohio, has been thinking the market would take a sharp drop for some time.
"We let clients know that if they need the money in the next two or three years, the stock market might not be the right place for them," she says.
But most of the calls she took on Monday were from customers wanting to buy on the market dip. "I had to calm them down, explaining that by the time your check gets through the mail it will be too late," she says.