Although Wall Street rallied for a second day yesterday, financial experts and investors in Hawai'i are taking a wait-and-see approach as to whether the surge was just a blip or a sign of better things to come.

The financial world was rocked this week when investment bank Lehman Brothers filed for bankruptcy protection, Merrill Lynch agreed to be acquired by Bank of America Corp., and the nation's largest insurer — American International Group Inc. — was seized by the federal government. The news sent Wall Street spiraling and left companies and individuals scrambling to protect their investments.

By week's end, the federal government announced a plan to bail out the nation's banks from billions of dollars in bad debt and took steps to insure individual investors against losses in money market mutual funds. The unprecedented steps were intended to restore investor and consumer confidence, as well as prevent a meltdown of the market.

The moves had an immediate impact as the Dow Jones industrial average rose by 368.75 points yesterday, a day after it saw a 410-point increase. But whether the bailout will provide a long-term solution to the nation's financial turmoil is yet to be seen, as investors anxiously await details of the plan.

Kalei Cadinha-Pua'a, president of Cadinha & Co. LLC, said yesterday that her financial management firm received a steady stream of calls throughout the week from customers, as well as nonclients, concerned about their investments. She said that while it appears that the markets have recovered, "it's on the back of a plan that our federal government has not released the details of."

"The bottom line is the dust has not settled," Cadinha-Pua'a said. "The viability of the plan that they're going to be discussing this weekend and how the markets will respond to them on Monday really depends on the details of the plan."

Cadinha-Pua'a said she fears that the emphasis of the government is "real short-term in nature, allowing the market some breathing space."

But she said the long-term burden that the bailout will place on taxpayers also needs to be addressed. She said she continues to tell clients that there are a lot of good investment opportunities, but she also cautions them to avoid the temptation of making a quick profit.

"If there's a lesson to be learned, it's quality, over time, will outperform, and don't speculate. Don't reach out for something for a quick buck," Cadinha-Pua'a said.

MARKET VOLATILITY

Allen Kamemoto, a certified financial planner with Transamerica Financial and president-elect of the Financial Planning Association of Hawaii, said he surprisingly has had few calls from his clients this week. He said he believes his firm has done a good job of keeping its clients informed of the market's volatility, so no one really panicked.

"I'm telling them to ride things out because we've gone through this before," Kamemoto said. "I've been through the crash of '87, '91 and 2000 and I know the people that got scared and did move money. They regretted it because when it turned around, they lost the rise in the market."

Cadinha-Pua'a and Kamemoto are not proponents of government intervention, but both agreed that something had to be done this time to prevent the Wall Street giants from collapsing.

"In this particular case it was so widespread and so 'gi-normous' — beyond gigantic and beyond enormous — that the federal government felt it was its duty to step in," Cadinha-Pua'a said. "My concern is it wasn't you and I that made these lousy investments, but you and I are paying for it."

For investors like Nancy Englehart of Kane'ohe, she's also hoping that the market will right itself. The 73-year-old widow said most of her income is derived from investments and current market conditions have her worried.

"I get panicky because that's a good portion of my income," Englehart said. "But I'm letting it ride because I'm fortunate enough to have a diversified portfolio."

Englehart believes that the current financial crisis was caused by the large banks and they have no one to blame but themselves.

"They've been giving out bad loans, 'creative financing,' that started years ago," she said. "When times are good, you can gamble. When things go bad, they've got to blame somebody."