were buying stocks in the last three years, they had one that was a grand slam and [they] didn’t take any [money] off the table. If you are going to play the individual stock game, particularly when you’re up, don’t be so nuts. That’s the greed factor. Again, emotion really destroys a lot of people. Discipline is important. Selling is important. You could always buy the stock back. You may or may not want to buy it back, but to watch [a stock like] Enron go from $70 a share to 50 cents is ridiculous.
McKISSACK: Your plan dictates something about your asset allocation. You may [decide to shift] to more bonds or cash as you reach certain life cycle events. The individual investments underneath those categories can hit their targets and you should be responsive to those, regardless of what is happening in the marketplace. And try to, whenever possible, not get caught up in the euphoria and emotion of a roaring bull market as we saw in 1999 and sell out of that stock. You may not get that $100 price, but at least you’ll sell out of it at $70 or $80 [a share].
B.E.: What is the current psychology of the individual investor?
PAYNE: Certainly, in 1999 — 2000, [investor] arrogance was outrageous. By the same token, from 1995 — 2000, you had an intriguing phenomenon, which was the result of the Internet, primarily, [and] television [networks like] CNBC and CNNfn. They gave investors access or piqued their interest about the game. They wanted to rewrite the rules.
The self-directed movement, in myopinion, is here to stay. [Investors] are always going to want to be in control. They want to be the pilots [and] are willing to let other people be the navigators. I still feel like investors want to know more. They are not just going to wait for a broker to call them and say buy this. Even with their 401(k)s, they are going to want to know more about what fund managers are doing [and] what their track records are.
GIBBS: The returns or the lack of returns that a lot of people are seeing [on their] 401(k) quarterly reports [have caused them to raise] a lot of questions [such as,] “Why am I paying these fees for funds that are not giving me any type of return?” I think that is going to trigger a lot more self-directed [investors to] educate each other instead of just turning it all over to someone.
EPPERSON: In the last couple of months, [people are] looking at a company like Enron and the amount of money that those employees have lost in their 401(k) [accounts]. People are now is saying, “I got into this 401(k) because I believed that I needed to build wealth and also I believed in my company, so I put a lot of my money into my company.”
B.E.: The Enron scandal has all but ruined investor trust. How can investors make sure they are receiving accurate and quality information