Calm urged amid bearish storm

Paul Clinton

NEWPORT-MESA -- As the stock market continues to dress down investors,

local financial advisors are urging their clients to hang tough.

Selling stocks now could be a major mistake, said Mitch Aase, a

financial consultant at Smith Barney’s Costa Mesa branch.

“The scientific way to lose money on Wall Street is to buy when

everyone’s excited and sell when investors are in a panic,” Aase said.

“We are advising our clients to turn off the clutter from the media and

stay focused on their long-term game plan.”

The market’s precipitous declines since a year ago, especially in

technology stocks, has been well chronicled in newspapers, magazines and

other media outlets.

After the out-sized stock gains of the 1990s, the last year has

brought the nastiest of bears out of hibernation. The Nasdaq market,

which hit 5,100 in March 2000, closed Thursday at 1,897. And it was up 67

points on the day.

A string of rate cuts engineered by Federal Reserve Chairman Alan

Greenspan should turn things around, Aase said. Greenspan has announced

three interest-rate cuts so far this year.

During the 50-year history of the Fed board, there have been 22 times

when the Fed cut twice over a 12-month period. Each time, a year after

the second cut, the S&P; 500 -- a closely watched index of blue-chip

stocks -- has risen, Aase said.

Smith Barney recommends investors put 65% of their portfolio in

stocks, 30% in bonds and 5% in cash.

With the equity market in constant flux, Aase and others acknowledged

that bonds have become much more attractive.

Newport Beach bond shop PIMCO Funds has seen its fixed-income funds

swell this year.

The mutual fund company offers 16 bond funds, including PIMCO Total

Return -- a $40-billion pot of money managed by Bill Gross.

Total Return has been the No. 1 selling mutual fund in both January

and February.

“People have realized that 2000 has made people think twice about

their investments,” PIMCO spokesman Jed Koenigsberg said. “We don’t want

to encourage anybody to turn their portfolio upside down and rush into

bonds as the savior.”