By Clyde Noel

Stock Report

Investors continued to dump their portfolios last Friday to indulge in frenzied selling, sending the Dow below the 8,000 mark for the first time since 1998. Early Monday morning, the carnage continued.

A gloomy forecast from Sun Microsystems sent that stock lower. A Big Mac and a coke are now more expensive than one share of Sun - hard to believe.

At the end of last week, not one of the 30 stocks in the Dow industrials managed to end trading with a gain. So far in 2002, the Dow has fallen 20 percent, the Nasdaq, 33 percent and the Town Crier index, 30 percent.

Logic says the market should be reaching a bottom and this coming week it should yield great deals for investors with extra cash and a desire to buy the beaten-down blue chip stocks.

However, fear of a continued decline breeds more selling. Some economists think the Fed should step in and cut rates more to stop the bleeding. But other investors fear that if the Fed did cut rates, it would only create more fears.

Many investment professionals warn the market might plummet even further in the upcoming weeks. So unless you have a cast-iron stomach, sit on the sidelines and hide your cash.

Cash redemptions of mutual funds have reached extraordinary levels. Last week, a report from the fund information company AMG Data Services showed $11.4 billion was redeemed over a seven-day period.

There is fear of last year’s moderate recession making a renewed appearance. There are signs of a slowing in construction and reduced retail sales. The dollar’s slide against the Euro has foreign investors pulling out their investments in blue-chip stocks and the list goes on and on.

Let’s hope we don’t have a Japanese-style pullback from risk in the United States. That’s when investors give up, banks refuse to lend and the economy languishes.

Historically, investor capitulation means the end of a bear market. Are we there? Who knows? The bad news is no one really knows when the moment of capitulation occurs.

Panic lurks on Wall Street for retirees and those who are ready to retire, with a lot of soul searching over their future. For young people the market is their future and savvy investors should be seeking out bargains. There are opportunities on the market you may never see again with stocks like General Electric, Johnson & Johnson and Exxon/Mobile.

Noel, a seasoned investor, covers the stock market for the Town Crier.