Conviction

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Nov 12, 2008 6:42 pm

Anyone else having a tough time finding any conviction in this market?

 
Logically, I am fine.  I would be buying here (and am).
 
Emotionally, I am hopeless.  It just feels like it's never going to get better, even though I know it will someday.  
 
With all the bad news that continues to come out and the fact that the economy keeps getting worse, it's tough to be positive.
 
Where are you guys at?  I kind of would like to know I'm not alone... 
Nov 12, 2008 6:55 pm

Fatigue, complete and utter fatigue, and a paralysis setting in that makes it nigh unto impossible to make any kind of recommendation.  When even the "good stuff" is getting crrrussshed, you kind of draw back your hand from the flame.  If not for cd's and insured bonds/utility preferreds, I'd be motionless.  Had one more client completely blow out today, and my side of the conversation was probably all of 45 seconds.  I've stopped explaining why they own good stuff, etc.  Doesn't matter anymore.

Nov 12, 2008 7:33 pm

agreed. prospecting is tough if not impossible. you??

Nov 12, 2008 8:56 pm

Been on site for years but never posted.  Just wanted to say thanks.  It's nice to hear my thoughts come from someone in the same place.  This too shall pass

Nov 12, 2008 9:06 pm

Believe it or not, got two really nice referrals this week.  I think my diversification approach will be, "Ok, first we will take this stack of $100's and put them in this drawer.  And then this stack will go over here behind the macaroni and cheese.  And this stack...."

Nov 12, 2008 9:28 pm
2wheeledbeemer:

Believe it or not, got two really nice referrals this week.  I think my diversification approach will be, "Ok, first we will take this stack of $100's and put them in this drawer.  And then this stack will go over here behind the macaroni and cheese.  And this stack...."

 
So you're going to buy Kraft stock?
 
I hear you on feeling fatigued.  I feel like crawling under a rock where no one can find me and staying there for a long, long time. 
Nov 13, 2008 7:57 am

Discouraged because they've been telling me it's easy to prospect in this market, that the other advisors are hiding under the desk afraid to call.
Well, what I've found is
a) the other advisors ARE calling their clients, at least their worthwhile clients.
b) the other advisors are pretty much saying what I say -- hold good investments, stay the course, rebalance, don't panic.
c) prospects understand that the carnage has been widespread, hitting almost everybody, so they are not really angry at their brokers. 'Paralysis' was a good way to describe them.

On the positive side, I do think this is a good time to build relationships that will blossom when prospects are prompted to wake up and do something.



Nov 13, 2008 8:50 am

I feel ya buyandhold.  Our firms have this way of telling us that "we're the only firm with good ideas!" , and "we're the only ones calling our clients"  when you hear things like this its best to just set the Kool-Aid down and take a lap.  Prospecting is really difficult right now, at least it is for me.  Good luck all, fight the good fight!

Nov 13, 2008 11:00 am

Snags, I must say thanks for recommending that 1907 book; just finished it last night.  I have to tell you, things used to be really really bad back in the day.  It's cliche, but if we could get through 1907, and the Depression, and every other damn panic we've had over the last 150 years, we'll get through this. 

If you need more conviction, call up some of your bond wholesalers :P

Nov 13, 2008 1:11 pm

It just keeps getting better and better...

 
Maybe it's just time to move to a beach in Mexico and sell oranges or open a beach bar.  This pretty much just sucks.
Nov 13, 2008 1:37 pm

If you didn't feel pretty discouraged by what we've experienced over the past year+, you'd better check your pulse.  It IS tough, but if we never had these periods of cleansing, there would be sixteen million advisors by now, which would probably mean 38 EDJ advisors in my town of less than ten thousand.  With each bear market comes a valuable learning experience.  Sure, I wish my clients didn't have to suffer the consequences of my education, but I still believe that they'd be a lot worse off without me.

 
There's no magic bullet here, just dogged determination and perserverance.  The last thing I want is for my clients to sell out lower that those who panicked some time ago.  We will rise from these ashes...that's about the only thing I'm pretty sure of anymore.
Nov 13, 2008 1:42 pm
gvf:

Snags, I must say thanks for recommending that 1907 book; just finished it last night.  I have to tell you, things used to be really really bad back in the day.  It's cliche, but if we could get through 1907, and the Depression, and every other damn panic we've had over the last 150 years, we'll get through this. 

If you need more conviction, call up some of your bond wholesalers :P

 
Who says we "made it through" those things?  What does "made it through" mean anyway?  It's not a criticism - I really question that if we had another Depression, that 10-15 years later, we would all be saying "wheeeeww, we made it through that".  Most people's finances were decimated during that time.  We all know that you get crushed like that, there is no recovery during retirement.  So I ask again (rhetorically), what exactly would constitute "making it through this"?  We have now gone sideways for 10 years (like start to finish on a roller coaster).  What if we go sideways like the 30's or 70's for the next 10 years?  What if you retired in 1999 with $1mm?  Today you probably have about 350K (after withdrawals and market losses).  In 10 years you're 85 and you say "yes!  we made it!  that bear market is over!!!".
 
Look up secular bear market vs. cyclical bear market.  It might give you some pause.
Nov 13, 2008 1:45 pm
Indyone:
Sure, I wish my clients didn't have to suffer the consequences of my education, but I still believe that they'd be a lot worse off without me.
 
 
It's hard to quantify this to clients, but you are very right.  And it's not ONLY that they have better ivnestments than they WOULD HAVE without us.  It's the OTHER stuff we helped them with.  Insurance, planning, estate issues, financing, tax issues, etc.  We can easily help clients be thousands, sometimes hundreds of $thousands ahead because of the path we led them down.  I know so many clients that would have made really DUMB mistakes (sometimes mistakes of ommission) without my advice.
Nov 13, 2008 1:54 pm
buyandhold:

Discouraged because they've been telling me it's easy to prospect in this market, that the other advisors are hiding under the desk afraid to call.
Well, what I've found is
a) the other advisors ARE calling their clients, at least their worthwhile clients.
b) the other advisors are pretty much saying what I say -- hold good investments, stay the course, rebalance, don't panic.
c) prospects understand that the carnage has been widespread, hitting almost everybody, so they are not really angry at their brokers. 'Paralysis' was a good way to describe them.

On the positive side, I do think this is a good time to build relationships that will blossom when prospects are prompted to wake up and do something.

 
I'm glad you brought this up. I have had two wholesalers tell me that, on average, their research has shown that FAs have lost two clients from a $100,000,000 book. The whole "everyone is angry at their broker" notion is a myth. I was just telling Icecold, in addition to my networking/prospecting strategy (Ice I'll respond to you later this evening when I can breath), I've had to resort to old school cold calling. My experience, along with that of the other senior advisors I know in the biz, is that no one wants to do anything. Period.
 
The only way to find new money, imo, is to weed out the people with Rollovers. You have to prospect new retirees. The only other option is selling complimentary/alternative services: life insurance, managed futures, or a fixed annuity here or there. Don't get stuck on the mutual fund/stock train that's run out of emotional steam (though everything is ripe for a buy). Just find something to sell and compliment your existing clients' portfolios and to prospects who already have brokers.
 
Someone here posted a great post talking about fundamentals (unemployment, rates, etc)compared to the 70's and 80's and even 2000 to calm nerves. I've been using that. For the prospects that know what they're talking about, I'll even hit on historic PE averages. (BTW, does anyone know what the average PE was in '73/'74?)
 
That's all I've got. It's tough, emotionally (how many of us have spouses wondering where the hell our paychecks are?) and professionally for all of us, old and new. I will say this, I'm glad to be fighting like a dog right now. Worst case scenario, if I don't have any clients/job, I canr est easy knowing I at least worked hard to stay afloat. That's all you can do. Work hard and be proud you were among the few that did (stares at brokers in his office who get here at 9am and leave at 3pm).
Nov 13, 2008 1:56 pm
B24:
 
Who says we "made it through" those things?  What does "made it through" mean anyway?  It's not a criticism - I really question that if we had another Depression, that 10-15 years later, we would all be saying "wheeeeww, we made it through that".  Most people's finances were decimated during that time.  We all know that you get crushed like that, there is no recovery during retirement.  So I ask again (rhetorically), what exactly would constitute "making it through this"?  We have now gone sideways for 10 years (like start to finish on a roller coaster).  What if we go sideways like the 30's or 70's for the next 10 years?  What if you retired in 1999 with $1mm?  Today you probably have about 350K (after withdrawals and market losses).  In 10 years you're 85 and you say "yes!  we made it!  that bear market is over!!!".
 
Look up secular bear market vs. cyclical bear market.  It might give you some pause.
 
You think he'd really have that much left after 9 years of withdrawals which incurring two separate 45% drops in the market?  I would think it would be a lot less than that.
 
Was talking to a buddy, another advisor, today, and we used to say about annuity company's guarantees, "Oh, if ING fails, we've got much bigger problems".
 
It's just funny, not really, but..."Oh don't worry, if Bear Stearns fails, there's much worse out there.  Lehman Brothers?  Gee, if LEH fails, we have much bigger problems.  If AIG goes under, well run for the hills, get a gun, and learn to make fire".
 
 
Regarding going sideways, pre-retirees are already in trouble.  Some may delay retirement by a year, but I don't see them putting it off longer than that if at all.  If you could short the chance of them reaching their retirement goals, I would definitely be doing it right now.
Nov 13, 2008 2:14 pm

Some of my retirees have no choice but to retire, they're getting laid off.  Some severance, but basically being shown the door...it is going to be very gloomy the next few years.  If anything, this should be a wakeup call to start saving even more...short term it hurts the economy, but over the long haul it will make the country stronger.

Nov 13, 2008 2:44 pm
snaggletooth:
B24:
 
Who says we "made it through" those things?  What does "made it through" mean anyway?  It's not a criticism - I really question that if we had another Depression, that 10-15 years later, we would all be saying "wheeeeww, we made it through that".  Most people's finances were decimated during that time.  We all know that you get crushed like that, there is no recovery during retirement.  So I ask again (rhetorically), what exactly would constitute "making it through this"?  We have now gone sideways for 10 years (like start to finish on a roller coaster).  What if we go sideways like the 30's or 70's for the next 10 years?  What if you retired in 1999 with $1mm?  Today you probably have about 350K (after withdrawals and market losses).  In 10 years you're 85 and you say "yes!  we made it!  that bear market is over!!!".
 
Look up secular bear market vs. cyclical bear market.  It might give you some pause.
 
You think he'd really have that much left after 9 years of withdrawals which incurring two separate 45% drops in the market?  I would think it would be a lot less than that.
 
Was talking to a buddy, another advisor, today, and we used to say about annuity company's guarantees, "Oh, if ING fails, we've got much bigger problems".
 
It's just funny, not really, but..."Oh don't worry, if Bear Stearns fails, there's much worse out there.  Lehman Brothers?  Gee, if LEH fails, we have much bigger problems.  If AIG goes under, well run for the hills, get a gun, and learn to make fire".
 
 
Regarding going sideways, pre-retirees are already in trouble.  Some may delay retirement by a year, but I don't see them putting it off longer than that if at all.  If you could short the chance of them reaching their retirement goals, I would definitely be doing it right now.

You're right.  I was just roughing it out.  But you got the point.  A million bucks should last a lot longer than that.  And the wildcard is, it doesn't compensate for what the retiree may have done with his money after the first trainwreck (went to all bonds or CD's), and then slowly eased back into the market around 2006 (he jumped off one out-of-control train, right in front of another!).

Nov 14, 2008 1:10 pm
gvf:

Snags, I must say thanks for recommending that 1907 book; just finished it last night.  I have to tell you, things used to be really really bad back in the day.  It's cliche, but if we could get through 1907, and the Depression, and every other damn panic we've had over the last 150 years, we'll get through this. 

 
I was flipping through the channels the other night, and there was a show on the 1906 massive earthquake in San Francisco on the History channel.
 
After picking up that 1907 book, I thought I'd watch it, maybe learn something.
 
There was a tiny little Italian bank in San Francisco that didn't have the same kind of vaults as the rest of the banks.  Because of the fires that erupted after the quake, the vaults in these banks locked up as a protection against the heat.  Fortunately, this guy that owned this little Italian bank didn't have that kind of vault.
 
So after the quake, he took all the money out of his bank and hid it with boxes of fruit and carted it off to an outdoor location where he set up a few pieces of wood, like a lemonade stand, and started loaning his money out.
 
He then chartered boats up to Portland and Seattle to buy wood to help rebuild San Francisco.
 
When he finally was able to re-open his little Italian bank, he renamed it Bank of America, which is now the bank we know today.
 
Good true story.
Nov 16, 2008 8:49 pm

Hi Guys,

 
Great post.  Glad I'm not alone.
 
I still believe in stocks for the long run of course.  What I'm not sure I believe is my companies relentless propaganda to try to make us feel good.  If we were on the brink of a cliff would they tell us?  I don't think they would or could.
 
I am hoping that all these differences they tell us between now and 1929 or true.  I'm sure you guys know all the differences (unemployment insurance, better FDIC coverage, etc).
 
Also, I have a hard time thinking that this huge government deficit is nothing to worry about.  Our government is spending money like a drunken sailor.  we're certainly over a trillion dollars when you add up Fannie, Freddy, and other shore-ups besides the main bailout.
 
I certainly don't want to sell clients out at the so-called "bottom".  If this market is like all other bear markets we should be buying.  If in fact it is another 1929 type scenario selling is the right option.  We always assume because past rebounds have been quick - this one will be too. 
 
We all act like financial history began in 1929.  We forget all the panics from the 1800's. 
 
I am not a gloom and doomer.  I hope the panic calms down and we get a small semblence of normalcy.
 
Anyone else questioning whether they should look for another job??
 
Glass Man