Racked by doubts over the stock market's huge decline Monday, a steady stream of Legg Mason Inc. investors bailed out of mutual funds yesterday despite gains that sent the Dow Jones industrial average up nearly 300 points.
"I think today was just a false start and that it'll go down again tomorrow," said Jan, who was liquidating her small account with the Baltimore-based brokerage firm. "There are just too many pressures, with the situation in Asia and Russia and Latin America. We're overdue for a substantial market correction."
Legg Mason allowed The Sun to monitor conversations between its mutual fund marketing department and investors yesterday if the newspaper agreed to identify callers only by their first names.
Like many shareholders in Legg Mason's $5 billion Value Trust fund, Jim from Columbia called at midday merely to find out the balance on his account, which had dipped from a high in late July of $6,580 to a little more than $5,000 yesterday.
An hour later, he called again, with orders to sell.
Another investor, Susan, put the brakes on a $100 monthly infusion into the Value Trust fund.
"I just need a little more control right now," she said.
But unlike the panic that sent the embattled Dow plunging more than 500 points for its second biggest loss in history on Monday, a fair share of individual investors calling Legg Mason yesterday seized the opportunity to buy at lower prices and snap up new shares.
Patricia, who had sought refuge from Wall Street's volatility by parking her cash in a money market fund, decided the Dow's fall was an aberration and transferred $5,000 into Legg Mason's Value Trust mutual fund.
"As long as it doesn't go down another 500 points, I guess I'll be all right," she said.
She wasn't alone. As the Dow gained momentum and climbed more than 200 points in mid-day trading, several mutual fund stakeholders took Legg Mason's counsel and expressed renewed confidence in the market.
Harry was one of them. After liquidating his mutual fund account on Monday, he called to see if it would be possible for Legg Mason to hold the check.
"Would it be too late to put that money into a money market account?" he asked, explaining that his feelings about the stock market's future had warmed, and he wanted to be able to reinvest in a mutual fund without wasting time.
"We're trying to tell people not to make an emotional decision," said Jerry Britton, a Legg Mason mutual fund representative. "That's hard, of course, when people have seen 10 or 20 percent of their portfolio disappear. But the market is helping us today."
More than a few investors just wanted to check the status of the stock market, the balances on their accounts, or to get some advice or some much-needed reassurance.
Ann, nervous about the 6.4 percent decline earlier in the week, called to liquidate her mutual fund holdings worth $2,700, until Britton coaxed her into switching the funds into a safer money market account with news of the market's rise.
"I can take the money out any time?" she asked, before deciding to make the change. "I think I'd be more comfortable with the money there, because I have a feeling the market is going to go down more."
Said Britton: "This job is part detective, finding out what people want and what their motives are, and part psychiatrist."
Tim Hersh, another Legg Mason mutual fund representative, had to be an adviser as well.
"Do you think it'll go down more?" Meena asked, calling to shift $1,000 from a money market account to the Value Trust mutual fund.
Hersh said no, replying that Monday's serious stock drop was largely the result of "panic selling." Moreover, he said Legg Mason's analysts believe America's economy to be strong enough to weather the current foreign crises that have strapped the economies of both the Far East and Russia.
Meena agreed, and went though with the transfer.
As the market surged toward a close 288 points above Monday's finish, Paul decided to get back into the game and cancel an order to shift his money from his mutual fund account to a money market fund.
"I was pretty nervous today," he told Hersh. "But hopefully this is a turn for the better."
Pub Date: 9/02/98