Local brokers: Stay invested, if you can stand the ride
September 29, 2008
EAGLE COUNTY ” This could get ugly.
Anyone invested in a mutual fund based on the Dow Jones Industrial Average has seen a nearly 30 percent decline in that average in just less than a year. Stocks have been battered over the last several months, and especially Monday, when the Dow Jones average lost more than 777 points in its biggest one-day drop in history.
As the market convulses over the national financial crisis, local brokers are fielding a lot of calls from clients. Other than advice to “stay calm,” there isn’t a lot to be done except watch and wait.
“The majority of my clients are in for the long term,” said Jamie Meirowsky, founder of J.L. Haneke Financial and Insurance Services in Edwards. “We don’t have a lot of clients close to retirement, so we’re telling people to sit tight. We’ve bought good companies.”
Meirowsky said that historically, the stock market has rebounded from other serious shocks, including wars, depressions and other financial and political crises.
But not all the companies trading now will survive, Meirowsky said.
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“Having companies fail isn’t the worst thing that could happen,” Meirowsky said. “It’s like a forest fire ” it cleans out the debris and allows new growth.”
Charlie Wick is the Eagle-based representative of Edward Jones Investments. He’s fond of the wisdom of uber-investor Warren Buffett.
“He says, ‘The stock market is a wonderfully efficient mechanism for the transfer of wealth from the impatient to the patient,'” Wick said.
“If people sell low, the people buying will get the ride back up,” he added.
Edward Jones advisers counsel their clients to diversify their investments in a portfolio that includes high-quality bonds and dividend-paying stocks.
“This is not the end of corporate profits,” Wick said. “The key is to be diversified.”
Merv Lapin of Vail Securities has been in the investment business for decades. Lapin said most of his clients are in for the long haul, too. But, he added, some of those clients can no longer stand the whipsaw ride the markets have been on lately and have sold out of the market.
“If you can’t take the volatility, then you need to take action that makes you most comfortable,” Lapin said.
Even while the market jolts up and down, Lapin said investors aren’t getting any help from Congress, which Monday rejected a bailout of financial companies.
“My concern is that Congress is acting as it has been,” Lapin said. “They’re not being very responsible and that’s accentuating the problem.”
Lapin, who’s been through his shares of ups and downs in the market, believes it will self-correct. But, he said, that could take three to five years.
“It could be very difficult,” he said.
Business Editor Scott N. Miller can be reached at 748-2930, or firstname.lastname@example.org.
777 ” Point drop by the Down Jones Industrial Average Monday.
10,365 ” Closing number for the Dow Monday.
14,164 ” The Dow’s all-time high, set Oct. 9, 2007.
22.6 ” Biggest one-day percentage drop, set on Nov. 19, 1987. The Dow dropped 508 points that day.