Wednesday, June 17, 2009

Stock up on Pampers

There is a discussion on LinkedIn about financial advisors and their clients, as follows:

Are they more optimistic about their investments than a few months ago? Feel worse off? Feel the same?

There were plenty of thoughts posted about this and I wanted to re-post two of mine and one of a colleague's here:

The "pulse" I got at Pershing Insite last week was that advisors are still talking about bear market strategies, capital preservation and the realization (finally) that asset allocation and diversification does not work in bear markets. That's the last battle, not the current battle

From Dave Steckler: My fear is that when the second leg down arrives, and arrive it will, many people will be scarred for life. They will have the same mentality that affected millions during the Great Depression - avoid anything other than government-insured instruments (CDs and Treasuries).

And from me again: At the risk of self promotion, I have to say that I wrote about what Dave just said in my column several months ago. The next leg down will devastate the psyche of the investor - who thought the broken market was all fixed and safe again - even though I do not see a new low being set. But for me, that is the final washout that sets the stage for better things ahead. Once the dust settles it will be the worst time to retreat into an investment cocoon. Advisors must grab this opportunity or risk being seen as being late on both ends of the bear.

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