Precious Moments in Financial Advice
Aug. 7th, 2017 08:35 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
walkitoutAs I was shredding financial paperwork, I came across this gem from Citigroup / SmithBarney, Fourth Quarter 2007. The author: Mark Rickabaugh, then of Anchor Capital Advisors LLC. "The above information was provided by the Fiduciary Services Manager indicated above. Smith Barney makes no judgment." So, you know, attribution and all.
"The stock market has been more difficult and volatile since mid-year 2007...Our view is that corporate profits will be weaker than expected and may actually decline in 2008."
Yay! Got that one right!
"Consumer spending will continue to be pressured by higher living costs including food and energy, the end of easy credit and the probability that employment trends worsen."
Understatement, sure, but basically, again, got that right!
"the investment sector of the economy ... is unlikely to cause the same level of job and profit growth in 2008 as in 2007."
Three. In. A. Row.! Wow!
So that's all good. They take a swipe at leveraged hedge funds. Mention sovereign wealth funds. And then they say:
"We will ... avoiding investment in companies where earnings declines could be negative enough to harm valuations or the business franchise. Our efforts will be focused on holding equities of businesses that are continuing to grow and remain at fair valuations."
I'm sure it seemed reasonable at the time, and I certainly did not think it was wise then, nor does hindsight indicate that selling everything and going to cash at that point would have been smart. But they clearly missed several of the popular plays of the time (US treasuries and gold being the obvious ones.)
"The stock market has been more difficult and volatile since mid-year 2007...Our view is that corporate profits will be weaker than expected and may actually decline in 2008."
Yay! Got that one right!
"Consumer spending will continue to be pressured by higher living costs including food and energy, the end of easy credit and the probability that employment trends worsen."
Understatement, sure, but basically, again, got that right!
"the investment sector of the economy ... is unlikely to cause the same level of job and profit growth in 2008 as in 2007."
Three. In. A. Row.! Wow!
So that's all good. They take a swipe at leveraged hedge funds. Mention sovereign wealth funds. And then they say:
"We will ... avoiding investment in companies where earnings declines could be negative enough to harm valuations or the business franchise. Our efforts will be focused on holding equities of businesses that are continuing to grow and remain at fair valuations."
I'm sure it seemed reasonable at the time, and I certainly did not think it was wise then, nor does hindsight indicate that selling everything and going to cash at that point would have been smart. But they clearly missed several of the popular plays of the time (US treasuries and gold being the obvious ones.)