So, as trading began yesterday, all eyes were on the small investors, some of whom were not sure how to react.
"I haven't decided what I'm going to do yet," said S. Lakshmanan, a computer analyst who reviewed the market situation early Monday at the Vanguard Investment Cos. office at 17th and Market Streets. "I made a mistake before and don't want to make the same mistake again."
Lakshmanan was among the many investors who, in October 1987, watched in disbelief as the market nose-dived, hoping that it was a momentary blip. He says he bailed out of his mutual funds days after that crash, only to realize that he could have waited and taken advantage of the market rebound.
He was not alone.
"I think the public got hurt back in 1987 because they panicked and they sold when they shouldn't have," said Nicholas Giordano, president of the Philadelphia Stock Exchange. "The most important lesson we've learned from 1987 is not to panic. . . . You can't maneuver around panic."
Giordano and other market watchers said small investors gained investment savvy from that experience and, as a result, reacted more calmly yesterday. Market analysts suggested that small investors would be wise to remember the lessons of 1987 during the market uncertainty in the days ahead.
"A small investor should decide to go into the market for the long term and stick to that strategy," Giordano said. "If he wants to be a trader, he has to live and die by the sword."
Nonetheless, there were those who wanted to take no chances. Many small investors remember how in 1987 they were literally locked out of the stock market, unable to sell stocks before they plummeted in value because their brokers' phones were busy or the brokers were too backed up with trades to act quickly.
One such investor, who declined to give his name, was at the Charles Schwab Co. office at 16th and Market Streets to handle his trades in person yesterday. "I didn't want to take any chances," he said.
Neither did Robert Klein, a Center City lawyer who was at Vanguard when the doors opened yesterday looking to sell his mutual fund shares. He was disappointed to learn that even if he sold his shares at 8 a.m., the check he would receive would be based on the value of his shares at the end of the trading day.
"You mean I can't get out now and avoid" a market decline, he asked a Vanguard customer-service officer.
While early risers like Klein looked to move out of stock funds and into the relative safety of money-market funds, by late morning many Vanguard customers were buying rather than selling mutual fund shares, according to John Woerth, a Vanguard spokesman.
"The majority of investors stayed the course," Woerth said. "Our call volumes were up 30 percent over a normal Monday, with most of our early risers looking to sell . . . but by midmorning we saw a reversal, and the wait-and- see people started to buy."
Some of the investors who crowded around Schwab's Quotron machines were gleeful about the day's opportunity.
"I'm like a pig in a bucket of garbage - I don't know what to buy first," said a man who identified himself only as Morris. "But I won't buy today. I'll wait for things to settle down some first."
He and other investors at Schwab were mostly waiting and watching the market yesterday. They were hopeful that if their favorite blue-chip stocks declined a bit in value, they would bounce right back.
"I told everybody I know to buy - maybe not today, but after we see what happens," said Michael Marchesano, a regular ticker watcher at Schwab. "If you liked Ford Motor Co. at $52, you've got to love it when it's at $49 and see this as a buying opportunity."
Many small investors apparently had the same view.
At the Philadelphia Stock Exchange yesterday, officials handled more than 10,000 trades - mostly buy orders - on an electronic system used by retail brokers to make small trades for their individual clients. The system records about 6,000 trades on a typical day, said Joseph Rizzello, president of the Philadelphia Board of Trade, the exchange's futures subsidiary.
"I don't think the retail investor was in the market at the level they were at in 1987," Rizzello said. "And if you look at the market, you have to say there was a lot of buying today."
At the Midwest Stock Exchange in Chicago, a similar system for small trades handled more than 13 million shares yesterday, up from a typical daily average of about 8 million. An official there said that nearly all of the early- morning trades were sell orders but that within a few hours investors gained more confidence and began buying stocks.
Because of Friday's market decline, firms such as Charles Schwab and Fidelity Investments were open Saturday to handle what they expected would be a flood of calls.
Although the volume of phone calls was higher than usual, there was no flood. Some suggested that was because small investors had learned in 1987 that they should not rush to sell at the first sign of market volatility.
"We expected to get a lot of calls, and we did," said Todd Peterson, manager of Fidelity Investments' Philadelphia office. "Most people didn't want to do anything. They just wanted to know what was going on."
Several Philadelphia brokerages said they did not expect to suffer any long-term effects because of Friday's plunge.
"This is by no means a crisis," said Skip Massengill, a broker at Butcher & Singer Inc. of Philadelphia. "There is no panic feeling in the air. People are calling up saying, 'What can I buy?' "
Massengill said that although many brokers had suffered after the 1987 crash, those in his office appeared not to be worried about the latest decline. Like some individual investors, they have learned to look at the long-term performance of the market.
"I'm just here to watch my money go away," said John Fricke, an independent stock broker. "I'm not worried. It will come back. It's all paper, anyway."