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Investors: Sit tight
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September 12, 2001: 2:35 p.m. ET
Financial pros urge restraint; some sectors may feel a pinch
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NEW YORK (CNNfn) - Don't sell your holdings in a panic. Don't try to cash in on a tragedy by buying stocks you think might spike up. That's the advice financial experts are giving individual investors in the wake of Tuesday's terrorist attacks.
"Sometimes the best thing is to do nothing," said David Elias, chief investment officer of Elias Asset Management in Williamsville, N.Y. "You don't want to panic."
Major U.S. stock exchanges are scheduled to remain closed Thursday for a third day following the strikes in New York and Washington. Trading could resume as early as Friday, but no later than Monday. Investors are bracing for the market to open lower, and analysts are worrying the calamity could hurt an already fragile economy.
But world markets began to recover Wednesday, and oil and gold lost some of their Tuesday gains. History also shows that U.S. stocks have been resilient to acts of terrorism and war.
Still, market watchers say some sectors may fare better than others in the coming weeks and months.
The outlook for stock sectors
Lawmakers, for example, may be more willing to spend on defense in the wake of the attacks on the World Trade Center and Pentagon, said John Davidson, chief investment officer of Circle Trust Co. in Stamford.
Stocks such as Boeing (BA: unchanged at $43.46, Research, Estimates) and Lockheed Martin (LMT: unchanged at $38.32, Research, Estimates) should do well, said Phil Dow, equity strategy director at Dain Rauscher Wessels in Minneapolis.
Diversified natural gas companies that offer alternatives to OPEC oil, such as Enron (ENE: unchanged at $32.76, Research, Estimates) and El Paso Energy (EPG: unchanged at $50.02, Research, Estimates) , are also good bets, Dow said.
Insurance carriers are likely to feel a pinch in the short term, but they might also be long-term winners, Davidson said.
"Near term, it's going to shake out some weak players," he said, "but in the long term companies will be more interested in taking out insurance and paying premiums."
Bank stocks could benefit if the Federal Reserve decides to continue cutting interest rates to keep the already fragile U.S. economy from falling into recession, said Ken Towers, chief market strategist at UST Securities Corp. in Princeton, N.J.
Drug company stocks are another good bet for the long term, analysts said.
"You don't need to worry what the economy is doing – people need to buy their drugs," Dow said. He likes stocks such as Pfizer (PFE: unchanged at $38.17, Research, Estimates) , Merck (MRK: unchanged at $66.10, Research, Estimates) and Schering-Plough (SGP: unchanged at $37.19, Research, Estimates) . He also likes medical device companies like Medtronic (MDT: unchanged at $42.54, Research, Estimates) .
On the flip side, sectors that are more likely to decline in the short- to medium-term include airlines and retail, Elias said.
"I know people who are already canceling flights overseas, and who are already canceling flights to the west coast," Elias said. Resorts, casinos and hotel stocks might also get singed, he said.
Lagging consumer confidence had already hurt retail stocks. Tuesday's disaster may just make matters worse, Elias said.
"We could have a terrible Christmas, and it could be another six months before things improve," Elias said.
What should you do?
Tom Gryzmala, a certified financial planner in Alexandra, Va., urged investors not to overreact when the market reopens. If you must take action, he advised, wait at least a week.
People with new money to invest might want to consider short-term bonds or bond funds with a maturity of two to three years, Grzymala said.
He also recommends preferred stock, which pays quarterly dividends and is less volatile than common shares.
Beyond that advice, however, Grzymala wants his clients to sit tight.
"Don't make a paper loss a real loss," Grzymala said. "We've not changed our modus operandi one iota. We're not saying 'sell.' " 
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