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How the Stock Market Swallowed New York

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One NAIC tenet is to stay "fully invested" in the market, so the members of MVP, sitting on $6,000 in cash, are impatient. There's a sharp, loud, fast-moving evaluation of possibilities ("Everyone's talking so much, this sounds like a seder!" jokes one member), full of arcana about P/E ratios and insider stock options, before votes are taken. It's decided the club will buy 75 shares of Diebold (makers of cash machines), 50 shares of Manitowoc (industrial cranes and ice machines), and 70 shares of Jones Medical. Then the floor is open to a discussion of general financial conditions. The mood is pessimistic; all of the speakers outline the reasons they're sure a recession is just ahead. John Slater, a 63-year-old retired market researcher, offers some insight he's gleaned from a professional money manager he knows and trusts: "He tells me the Asian recovery isn't going to be V-shaped or U-shaped," Slater says. "It's going to be an L. This big slide is going to be followed by a flat horizontal line."

Bernie Brachfeld, an Upper West Side dentist, hasn't said a word in the entire two-hour meeting. But now he pipes up. "So with all this bad news ahead," Brachfeld says, "why are we pushing this money back into stocks right away?"

Dead silence. Then Bob Freeman remembers the doctrine, the canon that they all cling to: "We're not market-timers!" he shouts. "The system is that you stay fully invested, or you miss the great leaps up! There's been 28 days in the past ten years that if you were out of the market, you would have missed the biggest advances." The others jump in, a babble of voices, reciting the mantras: We're in it for the long term. We're not speculators. A balanced portfolio. The fundamentals haven't changed.

Brachfeld, the heretic, shrugs and goes along. Later, he says he's far from convinced. "The other people, they're all strongly into NAIC and its principles," he says. "There's all these rules, but they're generalities. I just feel one should look at the specific situation. No matter what the philosophy, if the market goes down, you're going to lose money."

Downtown, the market's shedding another 175 points. But inside Prada's sleek, minimalist new Fifth Avenue flagship store, the walls are a soothing light green -- the color of happy, guilt-free money. The charge-card terminal is hidden out of sight, so no one has to be reminded this is a transaction. Prada has ridden to stylish prominence in the past five years, courtesy of a black nylon backpack and the bull market.

On the main floor, a shopper, Aljean Stuart, nods to a saleswoman -- yes, she'll take the $1,950 appliquéd organza sheath. "We've done well in the the past five years," Stuart says; her husband is a bond trader. "It isn't time to worry," she says.

A few amateur investors, though, are admitting to market fatigue. "The last few weeks have been really draining," Steve Hoffman says. "When things are going good in the market, I pay a lot of attention. I try to ignore it when it's bad, but it's been hard not to look lately. It's been nerve-racking. There are stock zippers everywhere. You go into Citibank on 50th Street, and they have all those flat-screen monitors with stock quotes going by your face as you're standing in line. It's like the hearth of the nineties."

Hoffman, the creative director at Sports Illustrated, is 47, married, with two children and a brownstone in Park Slope. "In 1987, I was blessedly poor," he says. "I wasn't paying any attention. I didn't have that much at stake. Now so much of our family's savings is tied up in the market. A few months ago, I said to myself, If I have this much money, something's wrong. Why has my money doubled? It's a sign the apocalypse is coming."

So did he sell and walk away with handsome profits? "No," he says with a rueful laugh. "Of course I let it ride. It's greed. Now I don't know which way things are going to go -- maybe I should sell, but the taxes make it worse, and I'll end up with less than I paid. But maybe I should panic." He's been calming himself with some small moves, shifting around the discretionary money in his 401(k) plan, moving some money into bonds. "But now I expect things to double every year, and it's depressing when they don't," Hoffman says.

When he was a child growing up in the sixties, Hoffman says, the stock market wasn't a subject of dinner-table discussion, which is one reason he's ambivalent about his current obsession. "I knew nothing about this world," Hoffman says. "During the nightly news, right before a commercial, they tagged on a thing about, 'And the Dow Jones Industrial Average rose ten points today.' I had no clue what it meant. Today, my kids know so much about the stock market. It's everywhere they look, on the news, in the air."


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