By Amy Higgins
The Cincinnati Enquirer

More than a sluggish economy, more than a potential war with Iraq - investors are just plain tired of losing money in stocks for the third year in a row.

That's why investors aren't buying, and the Dow Jones Industrial Average is down 5 percent so far this year, said members of The Cincinnati Enquirer's Portfolio Panel.

"There is a lack of conviction on the part of real long-term investors," said Sunil Reddy, equity analyst and portfolio manager at Fifth Third Bank, and member of the panel.

Indeed, members of the Portfolio Panel say they are holding on to more cash than they have in years for their clients - clients who have gotten so bear-market weary that they want to stay away from stocks.

"The market is not just fundamental, it's psychological as well," said Madelynn Matlock, vice president of international investments for Huntington National Bank. "It got way too positive in the late '90s; now it's way too negative."

The Enquirer gathers the Portfolio Panel - a diverse group of Greater Cincinnati investment professionals - every three months to discuss current stock market conditions and help readers understand what to do with their money.

The group first assembled in May 2000, just after the market peaked and stocks began their slippery slope into bear territory.

Then as now, the panelists have the same advice for investors: Examine your allocations, stay diversified, and stick to a disciplined long-term investing plan.

"Two years isn't a very long time when we're talking long term," Greg Weirich, vice president at PNC Advisors, said.

Indeed, investors who bought during the last great bear market in 1973-74 are still much better off today, despite three down years, said Denise Ingersoll, vice president of investments at Robert W. Baird Private Investment Management Group in Dayton.

Still, they foresee a recovery now more than ever.

"I think we are near the tail end of a long bear market, which was an inevitable result of the insanity of the late 1990s," Dan Seiver, economics professor at Miami University, said. "The market swings from one extreme to another, and the trick is to not get swept up with the crowd."

That's why investors should be careful about trying to buy stocks based on current events. While defense and energy stocks might be rising or falling based on news about Iraq and conflicts in the Middle East, individual investors almost never are able to profit from it.

Too often, they just get in or out too late.

Even missing the best price by a day or two feeds the frustration - and discourages investors, Ingersoll said. Despite the instant access of Internet accounts, investors should learn not to watch their brokerage balances very often.

"You've got to let it go," she said. "You shouldn't be looking."

Instead, investors wanting to buy should "average" their way in. That means buying in smaller increments at regular intervals to mitigate the price swings, said Fred Brink, equity analyst at Johnson Investment Counsel.

"You should be a collector of solid stocks," Weirich said. "But if you can't stand more losses, you shouldn't put it in equities. There always will be uncertainties."

E-mail ahiggins@enquirer.com.