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Is there more to come?
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October 27, 1997: 6:38 p.m. ET
Markets might open lower Tuesday, but some see a buying opportunity
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NEW YORK (CNNfn) - Tuesday's reopening of U.S. stock markets could arouse trepidation among investors, but some say Monday's massive selloff might serve as a good buying opportunity.
Some market watchers are looking for a continuation of Monday's meltdown, which pulled more than 550 points off the Dow Jones industrial average -- activating, for the first time ever, so-called "circuit breakers" that shut off trading early.
U.S. stocks fell in apparent reaction to the Hong Kong stock market's massive selloff, prompted by currency jitters that have swept Asia in recent months.
But Joseph McAlinden, chief investment officer at Dean Witter Reynolds, said that Monday's U.S. selloff doesn't mean all will be gloomy Tuesday.
"I think there will be a continued selloff in the morning, (then) a rebound in the afternoon," McAlinden said.
McAlinden predicted that while institutional investors might seek to unload more stocks, the smaller investor has done pretty well in the U.S. bull market and has no reason to leave.
Other traders, like portfolio manager Edwin Walczak of Vontobel, are even counting on investor fear to drive prices lower when the markets open Tuesday -- creating buying opportunities.
"I'm hoping that when Mr. and Mrs. Smith hear about this tonight that fear hasn't been outlawed," Walczak said. "I'm hoping for some quality stocks to get hit."
Walczak, criticized by some market watchers earlier this year for keeping 35 percent of his portfolio in cash, has been waiting for some time for a big opportunity.
What should the small investor do?
Some analysts recommend a strategy that worked in the wake of the 1987 stock-market crash -- buy blue chips, buy low-risk, buy quality.
For example, multinationals like Coca-Cola and Wrigley are strong global performers with less reliance on troubled Asia.
Coke closed Monday at 53-9/16, down from $70 a share two months ago.
"This is not a half-price sale, but it's close to a post-Christmas sale," Walczak said.
But some professionals express less enthusiasm about the long-hot tech sector, where many companies have strong Asian exposures.
Still, James Poyner, computer analyst at Oppenheimer, thinks techs might look good for the long term.
"This market reminds me a lot of late 1995, when we had a frenzied peak in the summer, a very sharp 20-30 percent selloff in the fourth quarter -- and then it was largely over," Poyner said. "This market kind of feels like that to me."
-- by staff writer Randy Schultz
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