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Judith Meuli, 50, was an active stock-market investor for ten years, putting money mostly into savings-and-loan and technology issues, until she lost $6,000 in the crash. Says Meuli: "I only want solid things, like real estate." Since 1983, she has bought, rehabilitated and rented four apartment houses, mostly in marginal Los Angeles neighborhoods. She prefers a safe haven for her spare cash as well: "I keep looking at banks that are paying good interest rates." New Yorker Peggy Berk, 37, who owns a media-consulting firm, cashed in stock worth $45,000. She spent about $40,000 moving her office to Fifth Avenue and furnishing it. "At least I'm investing in something I believe in," says Berk. "The stock market has become a crapshoot." Berk's remaining $5,000 will appear on her back: she bought two fur coats.
Still, a hardy minority of small investors profess to be unfazed by the exodus from the stock market. George Ware, 64, administrator of the research group at the Morton Arboretum in Lisle, Ill., has been investing in the stock market for 46 years. "I've been through so many ups and downs that it's not as upsetting as it used to be," Ware says. He keeps a fairly constant 25% of his portfolio in stocks, although he has gradually swapped more speculative shares for blue chips.
But such investors are getting rarer, as any stockbroker can attest. For the first six months of the year, commissions at all brokerage firms fell to $3.5 billion, down from $4.5 billion last year. Pretax profits declined 36%, to $1.6 billion from $2.5 billion. In general, companies that are most dependent on retail business have been the hardest hit, since individual investors pay higher commissions than their institutional counterparts. Paine Webber suffered a 99% drop in its second-quarter profits from the same period last year, and is rumored to be a takeover target. The poor profits are likely to prompt still another round of Wall Street layoffs before the end of the year. Since the crash, as many as 25,000 brokerage-industry workers have lost their jobs.
Partly to lure back the small investor, the stock exchanges have made some - major reforms. Because the simultaneous program trading of stocks in Manhattan and index futures in Chicago has often aggravated market volatility, the New York Stock Exchange and the Chicago Mercantile Exchange have proposed placing restrictions on prices when they start sliding out of control. If the Dow Jones average fell 250 points or more in one session, trading would stop for one hour on the Big Board and in Chicago's Standard & Poors futures pit. The New York Stock Exchange hopes to open an "express lane" to speed up the trades of small investors. Whenever the Dow moves 25 points or more in a single day, individual investors trading 2,000 shares or less would be allowed to execute their buy or sell orders before any large institution began to trade. All such reform proposals will need approval from the Securities and Exchange Commission.