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MONEY SMALL INVESTOR INDEX: STOCK INVESTORS CUT BACK THEIR BUYING

 /ADVANCE/ NEW YORK, May 23 /PRNewswire/ -- As the Dow Jones industrial average has soared to record highs -- topping 3500 last week -- small investors have begun to cut back their purchases of both individual stocks and equity mutual funds, according to data gathered for Money magazine's Small Investor Index.
 During the first three weeks of May, for example, clients of discounter Charles Schwab bought only $10 million more stock than they sold, compared with net purchases of $380 million in April. Similarly, Merrill Lynch reports that its customers are now buying 50 percent more stock than they are selling, down from a peak of 75 percent in early March.
 More recently, shareholders of equity mutual funds also have reduced their buying. After pouring an average of $3 billion a week into stock funds for four and a half months, they cut back sharply to $595 million last week, according to AMG Data Services of Arcata, Calif. That's the lowest weekly amount since late February.
 Analysts note that cautious individuals, as opposed to gung-ho institutional investors, are being sensible. "By several measures, such as price/earnings ratios and dividend yields, the Dow now stands near its most expensive level ever," says Lance Stonecypher, vice president of research at Ned Davis Research, an investment analysis firm in Venice, Fla. He adds, "If yields on certificates of deposit rise nearly a percentage point to 3.5 percent or more, the flow of money from CDs into stocks would slow, and stocks could go into a bear market."
 Last week, the Money Index, which tracks the typical small investor's holdings, rose $431 to a record $47,827. Stocks gained $468, while bonds lost $52. Certificates of deposit and money funds contributed $9 and gold rose $8.
 This Last Year % Change from a
 Week Week Ago Week Ago Year Ago
 103.43 102.49 94.76 +0.91% +9.15%
 Latest Changes for Each Asset
 % Change from a
 Category Index Week Ago Year Ago
 Stocks:
 NYSE 104.58 +2.69% +12.45%
 ASE/OTC 103.03 +3.23 +20.43
 Equity funds 104.53 +1.73 +11.57
 Bonds:
 Taxable bonds 104.74 -0.44 +11.48
 Municipals 104.49 -0.89 +10.61
 Bond funds 104.75 -0.07 +10.09
 Cash:
 CDs 101.38 +0.07 +3.80
 Money funds 100.97 +0.05 +2.76
 Other:
 Real estate 101.77 -0.27 -2.09
 Gold 144.38 +2.60 +29.48
 Jan. 1, 1993 equals 100
 Where Average Small Investors Have Their Money Now
 Current Year Ago Current Year Ago
 NYSE 23.30% 22.46% Bond funds 6.86% 5.79%
 ASE/OTC 7.36 7.09 CDs 13.33 16.47
 Equity funds 7.02 5.61 Money funds 24.00 23.77
 Taxable bonds 9.44 10.07 Real estate 0.81 0.78
 Municipals 7.25 7.42 Gold 0.63 0.53
 Sources: Bank Rate Monitor, the Federal Reserve, Investment Company Institute, Lehman Bros., Lipper Analytical Services, Merrill Lynch, Money Fund Report, Morgan Stanley Capital International, National Association of Real Estate Investment Trusts, Prudential Asset Management, Standard & Poor's, Robert Stanger & Co., World Gold Council.
 -0- 5/24/93
 /NOTE TO EDITORS: This material is also available in printable form from AP GraphicsNet and Access services for graphics and tables (under the file name MoneyIndex) and from PR Newswire for full text./
 /CONTACT: Jordan Goodman of MONEY, 212-522-3618, or Patti Straus of MONEY public relations, 212-522-2695/


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GK -- NY045 -- 1253 05/21/93 14:17 EDT
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Date:May 21, 1993
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