Stock market tallies record gain

Local advisers give advice
By: Bruce Warren Journal Staff Writer
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Financial adviser Brian Mishler of Edward Jones has been telling his clients for months about the stock market’s cyclical changes and Monday’s surge of 936.42 points – the largest one-day point gain since the Great Depression – proved his message. During a one-hour interview Monday at Mishler’s Nevada Street office in Auburn, the Dow Jones industrial climbed from a 462-point gain to 936.42. The previous high one-day gain was 499 points during the boom in 2000. 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.” Apparently a combination of factors contributed to that gain including European initiatives that put $2.3 trillion in guarantees and other measures to save banks there on Monday. “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. “I’ve had about three clients in the last week panic and move about 50 percent of their holdings to cash,” Mishler said. “They moved out of the market, but they’re not devastated. Their lifestyles have not altered.” To ease client fears about stock holdings, Mishler, who has 15 years of financial adviser experience, gives them a history lesson and sound advice on patience and diversification. “Since 1900, we’ve had 31 market declines of 20 percent or more and we’ve also had 31 recoveries,” Mishler said. “Why should No. 32 be any different?” 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.” Diversified stock holdings means more than holding stocks in different companies. “A lot of people think that just because you own a lot of different investments, they think they’re well diversified,” Mishler said. “That’s not true. They need to own complementary investments that avoid overlap.” 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.” History shows that gains come after bear markets. “Over the last nine bear markets, the market has gained an average of about 34 percent in the year following the bear market,” Barber said. “So, if you’re out of the market, then you’ve missed that opportunity.”