Ask Rande 10,000+

Top 95. Sep 11, 2001 12:36 AM

» rich_hine - Rande: Thank you for intelligent analysis

Rande:

Your intelligent, thorough and consistent analysis is so valuable and refreshing in a world where many analysts peddle the hot idea of the week, or flounder, or both.

Your generosity with your knowledge is much appreciated.

Thank you, Rande

- Richard

-- posted by rich_hine

Top 96. Sep 12, 2001 7:04 PM

» Rande - Setting the record straight

The media. There's been some discussion elsewhere here that some media bias is showing through, even in the face of such unprecedented terror and tragedy. By and large, I feel the media has done a good job in the face of overwhelming news. Reporters are people too.

There has evidently not only been some disappointment with some of the media's portrayals of our President at moments during this crisis, but, with respect to some of the financial press, frustration also with a tendency to accentuate the negative possibilities as we await the opening of our financial markets.

I mentioned yesterday that in the early moments of the tragedy I received a call from a reporter wanting to know about potential reactions in the markets. After the initial, "you've got to be kidding," we settled into a conversation which I hoped would convey a central theme -- "Don't let emotion dictate your financial decisions. Do nothing, and, especially, don't sell in a panic." I mentioned the financial market impact of events as remote as the 1906 San Francisco earthquake up to the assassination of JFK, and, more recently, the Gulf War amid the recession of the early 1990s. And while current tragic events always have some negative impact, fundamental and/or pyschological, the most important thing for the moment is to keep our longer-term perspective and maintain a level head.

Unfortunately, "Don't act on emotion, don't panic, do nothing, etc." never made it to print. The angle in this case had nothing to do with encouragement, but with fear. Not the worst case of out-of-context quotes I've ever experienced, and I've got no problem with the statements as they stand, but disappointing nonetheless, especially at a time like this.

In all fairness, it IS an emotional time (at one point during the phone call, the reporter blurted out, "Oh my god," as she saw on t.v. what I didn't see -- the complete collapse of the first WTC tower -- whereupon we sat silently at both ends of the line for what seemed like an eternity). But I want to be sure the message gets out: Don't base your financial future on emotion. Not now. Not ever.

Detroit Free Press, September 12, 2001

Attack likely to affect an already fragile economy, by Susan Tompor

The U.S. economy, already on fragile ground, could dip into recession territory after apparent terrorist attacks on the World Trade Center and the Pentagon on Tuesday.

Economists fear that consumers, who had been spending fairly steadily, now could retreat and hold back as fear takes over.

David Littmann, chief economist for Comerica Bank in Detroit, warned that "it's going to be very difficult" to avoid a recession at this point. "The problem here is the fragility of the economy and the magnitude of the possible
response," he said.

"I would never have expected anything so widespread," he said.

The New York Stock Exchange delayed trading indefinitely Tuesday morning after two separate planes crashed into the World Trade Center and another crashed into the Pentagon.

Phone calls made to some brokerage offices throughout New York's financial district could not be completed. All U.S. stock markets will remain closed for the day, the U.S. Securities and Exchange Commission said.

In overseas markets, European markets slumped. And the dollar fell in trading against the euro.

"All points of U.S. strength are being hit by terrorism and that makes the U.S. dollar vulnerable," said Jeremy Fand, head of global foreign exchange strategy at UBS Warburg in Stamford, Conn.

Many U.S. market watchers are worried about the fallout once stocks do begin trading again in the United States.

"When the market is jittery to begin with, bad news can be exacerbated," said Rande Spiegelman, senior manger for the KPMG Investment Advisors' personal financial planning group in San Francisco.

The U.S. economy barely made gains in the spring. The Gross Domestic Product, the country's total output of goods and services, grew at 0.2 percent in the second quarter, the slowest pace in eight years. Now some economists, including Littmann, fear that the third quarter could show economic activity below zero.

Littmann said the third quarter could end up being the worst quarter this year in terms of economic growth.

Auto sales also are likely to fall below a 16-million mark for the year, he said.

"Consumers do go into their shells a bit on this," Littmann said.

Littmann had felt earlier this month that the economy would be on its way to a recovery by year end. But he had warned that a recovery would be possible only if the U.S. military involvement would not escalate in hot spots elsewhere
across the globe.

Now, the attack raises serious concerns about U.S. military activity.

"We are at war, and we should act accordingly," said Gilbert Hammer, a Manhattan investment counselor who said he knows many people who work inside the two towers hit by passenger planes that were apparently hijacked early this
morning.

Widespread uncertainty is never good news for stocks. It's likely to be especially troublesome now because pessimism had taken over the stock market long before Tuesday's tragedy.

On Monday, the Dow Jones Industrial average had closed at 9,605.51. It was down 10.95 percent for this year. The Nasdaq index was down 31.38 percent for this year through Monday.

Going forward, market watchers see more difficulties.

"Just looking at the initial reaction, everything is pointing down," Spiegelman said.

-- posted by Rande

Top 97. Sep 12, 2001 7:20 PM

» Mark_J - Re: Setting the record straight

In response to message posted by Rande:

Sensationalism. Fear does tend to feed on itself, and maybe that sells newspapers. Believe it or not, as I peruse the web and various columns by "money gurus," they're all predicting an initial drop, which they claim is a great buying opportunity, because history has shown that the market always rebounds.

That may be the case, but if the crowd is thinking that... Maybe the bond markets will go nuts tomorrow, but if we wait until monday and let the news sit for a week, giving us time to grieve, focus, and think about life, maybe there will be less emotion-based trading on the stock market. Maybe news will play out, and we'll find out who is responsible and our resolve will be set.

I think the unknown is what creates fear. Lets hope that we can emerge from this horrific mess and bring those accountable to justice, ASAP.

-- posted by Mark_J

Top 98. Sep 12, 2001 7:29 PM

» Rande - Re: Re: Setting the record straight

In response to message posted by Mark_J:

Mark,

One thing's for sure, as long as the market remains closed we're okay. smile Liquidity is everything, of course, and the whole system would fail to function for long without it. But maybe it wouldn't be such a bad idea to leave the stock market closed all year from now on, except for one day in June and one day in December for asset allocation rebalancing. Might put a few gurus and a lot of brokers out of work, though. smile Joking, joking. We need the free financial markets and the sooner they open, the better. Regardless of what happens over the next few days, we will get through it if we can stay focused on better days ahead. Those days are coming.

-- posted by Rande

Top 99. Sep 12, 2001 10:20 PM

» DennisL - Re: Setting the record straight

In response to message posted by Rande:

Rande, I think you were too easy on that reporter in your post. She left out way too much of what you said, and did you a terrible injustice by doing so. Anybody reading her article as written who doesn't know our Rande would simply lump you in with all of the other doom-and-gloomers quoted in the article.

Shame on Susan Tompor. That was very shabby journalism.

-- posted by DennisL

Top 100. Sep 12, 2001 11:11 PM

» MichaelC_AU - Everything

Looks like I picked a good time to look at your and Kirk's discussions. I have been busy, with a new a baby boy, and have lurked some at Suite101 Finance Discussions since, posting once or twice in the politics thread. I really couldn't think of anything to add today, with the exception of maybe the biblical origin of Islam and Israel.

The posts about media bias during this tragedy are right on.

I read earlier tonight about the house arrest of Bin Laden in Afghanistan, with skepticism(even though I found it on Drudge, I just now heard that report on ABC.). I think that and Arafat's blood donation fall under my "yea right" mode of thought.

I will not be acting emotionally with stock trades either. We are lucky to have some differed accounts in cash.

-- posted by MichaelC_AU

Top 101. Sep 13, 2001 5:50 AM

» Rande - Re: Re: Setting the record straight

In response to message posted by DennisL:

Dennis,

The reporter had a story to write. Just a reminder that it's important to really hammer the point with these guys sometimes. I don't care so much about how it looked from a personal perspective, the quotes stand even if the context and narrative don't fit. My biggest concern is the message and that's where the disappointment lies. It's resonable and responsible to point out the potentially negative impact of these events -- the short-term pyschological fallout and the intermediate-term fundamental economic impact. But, at the same time, reason and responsibility should compel us to counsel calm and focus on longer-term goals and realities. To repeat: It is NEVER a good time to act on emotion when it comes to your financial future.

-- posted by Rande

Top 102. Sep 13, 2001 6:02 AM

» Rande - Re: Everything

In response to message posted by MichaelC_AU:

Mike,

Congrats on the new baby boy. On acting emotionally -- it works both ways. With cash on the sidelines, some may view an initial dip as a buying opportunity. Certainly, it could be tempting to think that such a dip would be completely irrational, driven by unthinking panic. At the same time, anything can happen going forward and there is the inevitable American retaliation to come. We should also expect some negative impact to GDP when it's all said and done, even if there's nothing else to come. Having said all that, if anyone feels compelled to "do something" when the market re-opens and there's just no stopping it, then buying seems to make a lot more sense than selling. So long as you can focus on the long term and won't get jerked out if we have a subsequent downturn and, that is. But the last thing I would be doing, the very last thing, is selling at the open. You won't be first in line for the best price on the way out and it's possible you may find yourself wanting to get back in at higher prices later on when the dust settles. Best advice remains -- Do nothing, stay the course with an appropriate allocation that doesn't keep you up at night. Obviously, there's enough in the world to accomplish that already without an inappropriate asset allocation constructed on emotion-driven buys and sells adding to it.

-- posted by Rande

Top 103. Sep 13, 2001 6:10 AM

» JeffChristy - Re: Re: Re: Setting the record straight

In response to message posted by Rande:

Rande
Too many journalist seem to have their own agendas. I suspect most of the story was written before you were called. It seems to me that she only used those quotes that supported her agenda. It would be interesting if you would talk to the other people quoted in the article and see how they feel. Maybe you could all put together a letter to the editor that represents the actual feelings of the group.

-- posted by JeffChristy