Monday, October 13, 2008

Trying To Read The Crystal Ball

Bruce Warren interviews some experts, who say don't leave the stock market (a sell signal if I ever heard one):
Richard Barber, managing director at Wachovia Securities in Auburn, takes a wait-and-see attitude toward Monday’s spectacular gain.

“It’s an 11.08 percent gain,” Barber said. “It will help take a small amount of the pain away after being down 18 percent last week. Now the challenge will be to see if we can hold most or all of it. It’s been the history of this market to give a large gain back in the next day or two.”

...“I think the apparent coordinated effort of nations all over the world to get this global problem turned around had a large effect on today’s gains,” Barber said. “I think it’s a combination of all the stimulus packages, including the fed lowering rates a half point last week as well as central banks all over the world lowering rates.”

Despite Wall Street woes, Mishler does not have many clients selling stocks in response to recent falling stock prices. Out of 420 local clients, only three have made drastic changes in their portfolios.

...For Barber, only a few of his 200 clients have cashed in their stocks.

“I can count the number of clients who have cashed in on one hand,” Barber said. “I understand the fear that has griped people that would make them want to sell even if it’s not necessarily a good idea. When your portfolio causes you do lose sleep at night, sometimes it’s better to just pull the plug, but fortunately the majority of my clients have resisted the temptation.”

Right now, Mishler recommends patience, but does not advocate blind patience.

“Be patient. Buy and hold does not mean buy and ignore,” Mishler said. “Now is a very good time to evaluate and make strategic adjustments to benefit from the coming recovery.”

...Barber does not know if the current market has reached bottom yet, but he knows what happens if clients bail out now.

“There are no guarantees that we’re at the bottom, but the market action in the last three days would indicate that if we’re not there, we’re close,” Barber said. “It’s not a good time to get out. Invariably investors get out at the bottom and then they lose the ability to recoup some of their losses.”

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