Chasing The Bull Market

By CBSNews.com staff CBSNews.com staff

July 27, 1998 / 7:51 PM EDT / CBS

Everyday, Marge and Joe Fisher check the closing stock prices on the Internet, reports CBS News Economics Correspondent Ray Brady. Some days, they win big.

The Fishers are just two of thousands of Americans for whom stocks are now a passion. They own and operate an auto parts store in Staten Island, New York, but their hearts are on Wall Street.

Between filling orders, both keep an ear to hourly stock reports on the radio. They admit they have high hopes and high expectations.

"My goal is to double my money in five years and for that to happen, I have to have a 15 percent increase per year," said Mr. Fisher.

Many new investors are even more optimistic -- and obsessed -- expecting even higher returns than the Fishers are seeking. That kind of thinking and investing worries many Wall Street veterans who fear the new class of small investors are chasing this bull market down a dangerous path.

Roy Neuberger, a 94-year-old broker, was in stocks during the 1929 crash. He's cautioning new investors.

"They have a naive idea that it's guaranteed that the future can look like the past few years. And they can count on a 10 percent to 15 percent return on their money forever," said Neuberger.

Investor optimism has sent the market rocketing to record highs this year -- just like in 1929, when Americans flocked into stocks and fueled rampant speculation and inflated prices. Then, the sky was the limit -- until the market crashed and set off the great depression.

The crash itself was not an unusual thing. The unusual thing was the aftershock with occurred in 1930 and the depression that followed.

Economic historian Robert Sobel says while high stock prices are definitely a problem, even another big crash won t set off another great depression.

"We have a Federal Reserve which has a much better grasp of the economy and how things work then we had then," said Sobel. "Our knowledge of economics is better."

In addition, Joe and Marge Fisher insist they trade wisely and don't buy overpriced stocks any more than they would buy overpriced auto parts.

"What I do is, I look for companies that may have gone down in value due to maybe a short term problem in the company," said Mr. Fisher.

If the stocks continue to fall, Mr. Fisher says he would become even more aggressive.

"What I would do then is jump in and buy more of those companies, because what that brings is bargain basement prices. It s a buying opportunity," he said.

Of course, Marge and Joe fisher's investment strategy only works if stock prices keep going up -- and that's something no investor can count on.