The United States' small investors, already reeling from steep losses in the 18-month-long stock bear market, face a major new test of their resolve in the wake of Tuesday's terrorist attacks.
Predictably, financial advisers are cautioning individuals to avoid making rash investment decisions when U.S. trading resumes. Stock markets did not open Tuesday and are expected to remain closed at least through Wednesday.
But some mutual funds and brokerage firms said that they received many calls from worried investors seeking to sell shares.
"The initial reaction by individual investors was they wanted to sell and to sell immediately," said Jon Brorson, director of equities at Northern Funds, the money-management arm of Northern Trust in Chicago.
Many analysts predicted the U.S. stock market would be hit with a heavy wave of selling when it reopens. Equity markets across Europe and Latin America dived Tuesday.
But experts say history shows selling in a panic is usually a bad move. Though there are no direct historic parallels to the worst-ever terrorist assault on U.S. soil, experts note that stocks often have moved higher within weeks or months of calamities, even if prices fell initially.
For example, the Dow Jones industrial average was down 9.7 percent three months after the 1941 Pearl Harbor attack, but it had pared that to a 0.1 percent drop within a year.
The Dow was up 25 percent a year after tumbling nearly 3 percent the day President John F. Kennedy was assassinated.
"It has always, in retrospect, proven to be a foolish thing to sell in the aftermath of these (types of) events," said Mark Keller, chairman of the investment strategy committee at brokerage A.G. Edwards & Sons in St. Louis. "My advice is to sit tight and not panic."
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