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Thursday, September 18, 2008
Enough!
7:26 PM | 
Posted by
Christine
The panic in the markets is just about enough to send me over the edge.
Morgan Stanley and Goldman Sachs reported better than expected earnings, and their stock prices dropped about 30%.
Some money market funds broke the buck this week because of Lehman and AIG inestments - this isn't a first, keep in mind. It happened a few years ago, and people took it relatively in stride. This time, investors are so convinced that the world is ending that they are flying to the safety of short-term treasuries like there is no tomorrow. They are so crazy, in fact, that today a billion dollars of them traded at negative yields. Yes, people purposely lost money in T-bills. This hasn't happened since 1940. We (along with several other big houses) had to close our treasury money market fund to new purchases last night in order to protect the yield for existing holders.
Imagine the fury.
The rollercoaster of the major markets is enough to make you throw up, even intra-day (150 points up, 150 points down, 410 points up. Pass the pepto, please).
My clients are calling in tears, and all I want to do is politely tell them that it's that kind of panic that has made this mess into a catastrophe.
Here's the thing. If the market goes down, keeps going down, and never recovers?
Yeah, you're not going to give two shits about your investment portfolio. You won't have a job, a home, an economy, or a government. And if you think that's going to happen, then you really shouldn't be investing at all, anyway.
Panic breeds failure. The media, the bears, and the fear-mongers have dug us a hole so deep that getting out is getting harder and harder every day.
Please just stop. Let logic prevail again. We'll get through this, and everything is going to be okay again. I promise. Stop making this so much worse than it really has to be.
Please?
You're killing me.
Morgan Stanley and Goldman Sachs reported better than expected earnings, and their stock prices dropped about 30%.
Some money market funds broke the buck this week because of Lehman and AIG inestments - this isn't a first, keep in mind. It happened a few years ago, and people took it relatively in stride. This time, investors are so convinced that the world is ending that they are flying to the safety of short-term treasuries like there is no tomorrow. They are so crazy, in fact, that today a billion dollars of them traded at negative yields. Yes, people purposely lost money in T-bills. This hasn't happened since 1940. We (along with several other big houses) had to close our treasury money market fund to new purchases last night in order to protect the yield for existing holders.
Imagine the fury.
The rollercoaster of the major markets is enough to make you throw up, even intra-day (150 points up, 150 points down, 410 points up. Pass the pepto, please).
My clients are calling in tears, and all I want to do is politely tell them that it's that kind of panic that has made this mess into a catastrophe.
Here's the thing. If the market goes down, keeps going down, and never recovers?
Yeah, you're not going to give two shits about your investment portfolio. You won't have a job, a home, an economy, or a government. And if you think that's going to happen, then you really shouldn't be investing at all, anyway.
Panic breeds failure. The media, the bears, and the fear-mongers have dug us a hole so deep that getting out is getting harder and harder every day.
Please just stop. Let logic prevail again. We'll get through this, and everything is going to be okay again. I promise. Stop making this so much worse than it really has to be.
Please?
You're killing me.
5 comments:
Sounds like someone needs a hug.
Or a high powered assault rifle.
How many stories is your office building?
I agree with you, mostly. I haven't called my investment advisor. I haven't made any changes to my 403(b). I'm in it for the long run, and will ride this out. Others should do the same.
But I have major issue with you blaming "the media, the bears, and the fear-mongers" for digging us "a hole." Nobody in those groups put millions of dollars into derivatives they didn't understand. None of them borrowed money backed by high-risk (junk) mortgages.
Do we all need to calm down? Yes. But don't blame the media. Blame your colleagues in the financial sector that willingly combined greed and ignorance. They are the one that created this mess.
The rest of us need to ride it out, and display the common sense not displayed by people on Wall Street that were creating complicated investment plans even they didn't understand.
I'll say this - NPR's coverage has been balanced. I applaud public radio for being more than fair.
Bears and fear mongers are the biggest problem. Those are the short-sellers, the brokers who panic, and the financial advisors who aren't giving their clients good advice. Yes, they are many of my peers, and no, I won't defend them.
But when that is compounded by a new article on CNN every five minutes asking how many companies are going to fail today, it is really a shame.
All of these factors come together to drive prices down, reduce companies' ability to raise capital, and therefore push them to a failure (and huge cost) that could have otherwise been avoided.
Failure is avoided by sound business practices. When CEO's are not telling the truth about their balance sheets, it should be reported. Do not shoot the messenger until the ones that caused it are buried.
M, dear, I'm not even sure what you're talking about. I'm not complaining about lies being reported. I'm complaining about hysteria.