Oldtimers Unfazed By Market Swings Recent Dow Decline Nothing Compared To Some In The Past

As stocks continue to fall, here are some comforting thoughts.

“We don’t pay attention to what the market’s doing,” says Martin J. Whitman, who manages the $900 million Third Avenue Value Fund. Whitman is 72.

“I don’t worry about volatility,” says George Mairs, who runs the $190 million Mairs & Power Growth Fund. Mairs is 68.

“If I had left the market all the times people were telling me to, I would have no money to lose,” says Irving Brilliant, manager of the $175 million Salomon Brothers Opportunity Fund. There have been many such times. Brilliant is 78.

Albert O. Nicholas, 66, manager of the Nicholas Fund, can’t be happy about declining prices. But he was ready for them. In January, Nicholas said the market’s six-year winning streak might be about over.

Any 32-year-old fund manager can make money when stocks are rising. When the market stumbles, financial advisers say investors are better off with the guys whose records trace back for decades.

Whitman, one of the older fellows, started in the investment business in 1960, when the Dow Jones Industrial Average was at 610. He has overseen other people’s money through the bull markets of the 1960s, the bear markets of the mid-1970s and the crash of 1987.

While the average stock mutual fund was down 1.98 percent in the first quarter - and some were down more than 20 percent - Whitman’s Third Avenue Value fund was up 1.7 percent.

In the past five years, the fund ranks No. 15 of 249 “growth” funds tracked by Bloomberg Fund Performance, rising at an annual rate of 17.93 percent.

“It’s taken me since the 1974 market crash to learn that the quality of a company’s balance sheet is the key to buying safe investments,” Whitman said. “There’s no way to avoid market risks.”

The Dow industrials are down 8.02 percent since closing at a record 7,085.16 on March 11 and the Nasdaq Composite Index is down 8.8 percent in the same period. Whitman’s fund is down 5.4 percent in the same time.

As recently as last week, Whitman had 43 percent of his fund’s assets sitting in cash-related accounts.

Now, Whitman is taking advantage of the market’s plunge to add to an eclectic mix of holdings, which includes Tokio Marine & Fire Insurance Co., a Japanese insurer, and Raymond James Financial Inc., a Florida-based brokerage firm.

Mairs started managing money in 1952 and launched his mutual fund six years later. He takes a more traditional approach to investing than Whitman. He looks for companies that generate consistently strong earnings growth. He usually owns fewer than 35 stocks and tends to hold them a long time - 10 years or more in many cases.

Mairs said he believes the market is fairly priced, with stocks in the Standard & Poor’s 500 Index trading at about 17 times this year’s estimated earnings. “The market was more expensive than this on a price-to-earnings basis in the years 1972, 1987 and 1991,” Mairs said.

The 28-year-old Nicholas Fund, which has been managed since inception by Albert Nicholas, is up 1.5 percent so far in 1997.

Nicholas Fund is a stock fund that invests the bulk of its assets in U.S.-based companies.

Nicholas said in a recent interview that the toughest time he ever had managing money was in 1973 and 1974, when the Dow industrials plunged 45 percent.

“The market went straight down for two years,” Nicholas said. “In the past 15 years, there hasn’t been a down market for more than four months at a time.”

Brilliant’s Salomon Brothers Opportunity Fund tends to concentrate its $175 million in financial stocks, a style that hurts in years like 1990 when there were broad concerns about the health of the banking industry. Still, the fund has risen at annual rate of 10 percent over the past decade.