December 1, 2008

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Wealth Management

December 1, 2008

The economy has everyone from Wall Street to Main Street on edge these days. Local financial experts are advising to stay calm and think long term when making decisions. Our experts also discussed the government bailouts, succession planning and international economies. And though the economy is dark and dreary, our experts point out that there are opportunities to take advantage of. We’d like to give a special thank you to Kim Smith, professor at Brigham Young University, for moderating the discussion, and to Holland & Hart for hosting the event. Participants: Martin Lewis, Utah Business; John Bird, Albian Financial; JJ Johnson, Charles Schwab; Kim Smith, Bigham Young University; Matthew Clark, Mountain America Credit Union; Owen Fisher, Wealth Navigation; John Holmgren, Ameriprise Financial; Rees Petersen, Wells Fargo; Jeff Bland, Burrus Institutional Wealth Services; Mike Poulter, U.S. Bank; Stan Nelson, Edward Jones; Lon Henderson, Soltis Investment Advisors; Craig Nelson, Bank of American Fork; Robyn Martinez, J.P. Morgan Private Wealth Management; Roger McQueen, Northwestern Mutual; Bill Wallace, Key Bank; Rick Johnson, Stoel RivesBarksdale, Manpower Inc. How are you advising your clients concerning the economic crisis? J. JOHNSON: I don’t think we’re changing a whole lot about how we advise clients to invest their money over the long haul. First of all, people should be insuring that their short-term cash needs are indeed in cash and liquid types of investments and the long-term assets are still invested in a solid, diversified way. BIRD: I think it’s challenging right now, if someone shows up to visit you or calls you because they haven’t been working with a financial advisor and they don’t have their investment policy right. When Jim Cramer came on the television and panicked and said, “If you don’t have five year’s worth of cash, do it now,” we got calls from clients who are in retirement, and we could point out, you did that. That’s the set up that you want to have. So at this point, I would agree with you, J.J.[Johnson], it’s not the time to make dramatic changes. But hopefully you’ve positioned your policy correctly coming into this mess. CLARK: Some of the things we are advising our members and our clients is to keep their total revolving credit below 35 percent to protect their credit score. We know that those individuals who have credit scores below 730 are going to pay higher rates. That means more money that they are not able to keep. We also tell them to not miss a payment. Those are things that will help increase your credit score and also protect it. Although the federal government and the different agencies are doing things to create liquidity, [maintaining a good credit score] is one thing that people need to be prudent about. WALLACE: I think it’s important for clients to get perspective. In the press you hear a lot about how it’s different this time and that this is unprecedented. I think there are some unique things about each time we go through these kinds of processes, but if you look at the history of the financial markets, what we are going through right now is not unprecedented. And when you have that kind of perspective, hopefully it gives you some confidence in the future and some staying power to be able to stay with your plan that hopefully you’ve put together before the bad times hit. HENDERSON: I think we all agree it depends on the risk profile, the time horizon of an individual client. There are some clients that think this is just a wonderful opportunity. You can take an aged maven like Warren Buffett, who sees this as one of the best opportunities. You might remember from his history that he got out of the business at about 71 or 72 and actually sold out his own private equity, which would have been considered in today’s world a private equity portfolio, which is really a portfolio of just stocks and bonds, and then began to invest at 73. I think what he was doing with his key acquisitions, not only domestically, but he has made a fair amount internationally, even in the emerging markets, illustrates that a long term investor can have some great confidence right now. For those who are older, they think, “I can’t outlive my resources.” And so it is a time to relook at standard deviation and relook at their volatility measurements. And most of them came into this well prepared, so they are OK. It depends on your time horizon. It also depends on what kind of investor you are. POULTER: From the perspective of a bank, we’re advising our clients to still borrow. We’re still lending money and clients still need the money. They still need to borrow to continue their businesses, pay their employees and invest in capital expenditures. They are still spending on those things here in Utah. So we’re telling our clients to still spend and borrow. It’s going to be an important part of our recovery, but to be wise, of course, about what they are doing. MARTINEZ: With my team, we are having more in depth conversations about not only the cost of borrowing, but how does that work into the overall tax plan taking into consideration that our tax picture is going to change in the future, along with the cost of funds being more expensive now than they were last year at this time. So we’re, again, having the same conversations about whether now is a time to borrow this money. Is it a time to cash in an asset to pay for maybe a finance of a new home? But those are conversations that last year seemed to be a little less so. McQUEEN: Helping clients on an individual basis is certainly helping to manage their emotions. And those emotions are greed, which sometimes gets us into these positions, and fear, which is the worst to be getting out of the positions. And as mentioned, a good plan, a good solid position, the asset allocations and stuff on an individual basis is certainly going to help you manage those emotions that we all get caught in. I think also that it can be a wonderful opportunity, if you are in a good position. HOLMGREN: I have a few clients that haven’t normally had to take a lot of loans, home equity or things, because they’ve had plenty of assets and cash flow that are now actually adding credit into their strategy, so rather than liquidating assets that might be down 10, 20 or 30 percent, depending on how aggressive they were, they have their homes paid off or they are actually good borrowers and are getting home equity lines of credit as a way to cover cash flow while the markets have time to rebound. So I’m seeing some of my clients that really haven’t had much use of credit because they’ve pretty much paid as they’ve gone. And I haven’t had clients calling saying, “I haven’t been able to get loans.” S. NELSON: Our client base ranges from the very young, very small investor to the quite wealthy. But one of things we like to tell them, especially in a time like this when there is so much negative news is to consider the source of the news. What we like to say is, “You can’t control what Congress does. You can’t control what the big investment bankers do. But, you can control what you do. And, as long as you invest based on sound investment principles, you are going to do very well.” And we refer to history and make sure that clients are invested well, are diversified properly and have enough cash on hand to carry them through any tough times—several months typically. It’s the same story as what we’ve always told our clients, but we’ve done a lot of hand holding in the last few weeks. HENDERSON: Whether we all agree with this or not, we’re seeing that there is a deleveraging taking place all over the world. We’re not quite as bullish to think it’s going to come down and pop right out of where we are right now. We think that there is going to be a continued deleveraging that is going to go on throughout the globe. While that takes place, high quality, solid cash flow companies who are not relying on a bank or required to receive a line of credit are going to be king in this environment. Identifying those kinds of companies will be paramount. Of course, we also know there are going to be industries that are going to succeed well as they have in the past—health care and others. But we see that this is going to take some time. There has been a binge of credit and a binge for debt. We think it’s going to take some time to unwind and we are positioned to be careful as we go through looking for individual buys. C. NELSON: It’s always about perspective. And, it is important to help clients and individuals maintain that perspective. I heard a great analogy the other day that relates well. Because there are a lot of markets down, not just the investment or stock market, but the real estate market is down as well. I own a home, but I don’t go every day and ask the appraiser to come in and give me an appraisal to find out what that value is. And I’m not calling my realtor every week saying, “Hey, my value is down. What am I supposed to be doing? Should I get out? Should I move? Should I sell? Should I buy another one?” I thought it was a great analogy and I’ve tried to use that with clients to help maintain that perspective in this different and troubling time we’re in. BIRD: I’d mirror these comments in that it is impossible to know where we are going to go unless we have some idea of how we got here. We should look at three trends over the last 25 years that got us here. The first one is in 1980, a dramatic ideological shift that in fits and starts has led us towards unfettered markets. Whether we like it or not is irrelevant. It is a trend that exists. Second is while that has been happening, there has been a phenomenal increase in technology capability, which has allowed us to develop financial instruments that couldn’t have existed without that technology. And the third is a federal [government] that has been able to pump money into the system without causing inflation as it would have in the past because of the globalization of wages and the increases in productivity. So in 1980, private debt was 90 percent of GDP. In 2006 it was 250 percent of GDP and it kept growing in ‘07 and into ‘08. So we are levered up and we have to unwind the leverage. How does the U.S.’ current situation compare to other nation’s economic crises? BIRD: Japan got levered up and in 1991 started into a recession. They had a cancer and it took them about 14 or 15 years to admit they had a problem and deal with it. We tend to be much more of a train wreck society than a cancer society, and we are in the mist of the train wreck and it’s not fun. I don’t know if it will happen in quarters or years, but I think we are going to stand up dazed and say, “They are dead and they are dead. He is sick, but we can fix him and now let’s move forward.” I would suggest we are well into that train wreck. SMITH: Interesting comparison to Japan. I don’t know whether that scares anybody. I was assigned to work in Japan, and I got there in late 1989 as the Nikkei hit almost 40,000. And given word is now it is at a quarter. Does anyone have nightmares of that kind of a scenario? WALLACE: I think our society will face up to the problems faster. And then it is unlikely to be as a protracted event as in Japan. The deleveraging process is definitely an issue that is going to impact the economy for, I think, quite a few years. BIRD: And the stock market is getting the headlines, but it is not the problem—it is an indicator of the problem. But it is the only global asset class where you can get liquidity now. There is a price you pay, which is: you get lower prices for your liquidity, but where the liquidity is required, which tends to be the mortgaged properties and real estate, you can’t get your liquidity there. So the indicator is demonstrating there is a problem, but we have to deleverage to really solve the issue. HOLMGREN: I have heard some of our clients saying, “Are we going to go through what Japan went through or these other economies?” And our economist talked about the fact that he had interviewed some economists from Japan and realized after that one of the differences is that we will allow train wrecks from a societal, culture standpoint. And that seemed to be Japan’s problem—they kept lowering rates basically to zero hoping things would work out as opposed to doing what has been happening over the last few months of letting some institutions fail. I think what has been nice for clients is to come into our offices and sit down and plug in new numbers, even with the current situation and say, “Well, you are still on track for your long term goals. Maybe it is not the same picture you had before, but you are still on track.” That has been something that has helped calm nerves, realizing here are some opportunities. But a lot of what I’m getting now is people just realizing that we can make some adjustments, this isn’t going to be a forever thing. PETERSEN: Talking about countries, Japan faced its crisis in a certain way that matched their culture and really lost a decade. It’s interesting to see that Sweden faced something similar, and they took much more aggressive action from the government. They did the triage that was discussed, and they came out of this much faster and much stronger. I think that is a model that our country is more likely to follow. What do you think of the government’s bailout plans? Do you think it is the government’s place to pick who is going to survive the economic storm? HENDERSON: With reference to the government identifying specific industries, that’s a big concern to us in our business because we’re seeing this interesting culture starting to develop just like a drama where you have the villain, and right now Wall Street is the villain and the victim is Main Street. And then out of all this we are getting the hero, which I’m not real excited about, and the hero is the United States government. And that goes to more regulation and when what we really need to apply are better principles. And really, what has happened, whether it’s Wall Street, Uncle Sam or Main Street, everybody is guilty. All of us have a neighbor who levered up and tried to buy that home with nothing down. We all know about people who are spinning homes. We all have a friend who may be a real estate broker who is trying to get a few extra points of commission. It goes all the way from Main Street to Wall Street to the government. WALLACE: One area that I worry about with the introduction of more and more government solutions to our problems is I’m wondering if we are opening the door to a less dynamic economy going forward and an economy that is maybe going to experience a slower growth rate. HENDERSON: There are still some valid, rational reasons for investors and retirees to be concerned about this market. When you look at home prices still, even though they are off of their highs, they are still, in relation to median incomes, pretty far out of whack in relation to the historical norms. And I think it will take some time for the economy to absorb that and for consumers to feel more comfortable about spending money. So in the meantime, what do you do? Well, you continue to invest in a diversified way, finding value out there with companies that actually are still healthy, vibrant and making money. And, have sufficient cash for your short term needs so that you are not forced into selling into these weak markets. BIRD: We’ve had 12 depressions since we became a nation. The first one was in 1792, and that was the first fed bailout, when the federal government stepped up to back the war bonds because we were looking at a credit default. Perhaps the most instructive one was the 1873 depression, which was driven by an over extension of credit in both Europe and America based on the belief that economic growth would continue forever. And so people levered up in the face of that. It didn’t work out. That was a depression that was quite deep for four years. But what was interesting is business went on. And if you were a company in that period and you didn’t have a levered balance sheet, you could finance your growth through your own cash flow. So as we look at this, yes, I’m very concerned about any company with a levered balance sheet, but I’m a whole lot less concerned about companies that can finance their growth with their own cash flow that are not reliant on the credit markets for their growth. I suspect they are going to come out of this with more share. And unless you believe Western capitalism is over, which I don’t, I believe there are a lot of opportunities here. HOLMGREN: It’s interesting because I’ve had some people say, “Well, could it go to zero?” And when you realize there are patents and technology and innovations, these companies have value. We’re just trying to figure out, did we go too far below or where is it at? And that will work over time. But people are still going to need software and they are still going to drive cars and they are still going to the grocery store. So as you explain to clients, “Are we going to go back to an agrarian society and quit using these things we have?” We may change our buying habits, and those companies may have to adapt to what they are selling, but the reality is it’s not going to go to zero. BIRD: If the price goes to zero, I’d tell my clients, “We’re buying everything. We own the world.” Where do you see opportunities for those who are in a healthy financial position? Would you advise those individuals to invest now or wait? And, what sectors would you be watching to get into? WALLACE: I would say to look at the big picture. It’s interesting because it can vary by client. If you have a client who is concerned and really upset, it’s hard to go to them and say, “Let’s put some of your money into the market.” And then you can be talking to another client five minutes later who has a different risk tolerance and will agree with you, “Yes, I think we should put money into the market.” Before getting into specific sectors, find out what asset classes you are willing to go into. HENDERSON: The only thing that goes up in the bear market is correlation. Everything is correlated before it goes down. So it is a time that it’s hard to take those asset allocation positions. But there are great opportunities out there right now. What are some of the asset classes? Some people are looking at small cap, which is crushed. Emerging markets were crushed. Although it was selective picking, they were hit very hard. So again, we’re looking at very positive, strong balance sheet companies. We’re looking at money managers who are looking at some of these beat down areas, but specifically other emerging small cap. And this might scare people, but Warren Buffett thought that some of financial industry is good. S. NELSON: Our chief market strategist, Alan Skrainka, came out with a comment earlier this week. He said, “It appears that many of the best quality companies’ stocks are priced for disaster,” meaning that the disaster that some people might assume might be coming is already priced in. So he says if you buy stocks now and it doesn’t come, you are going to be well rewarded. And if it does come, you are buying at probably the lowest you can anyway. So we think it’s a very good opportunity for those good, quality companies that continue to report high revenues and record earnings, and there are still a lot of them out there. The other area we see that I’ve been doing a lot of business in is bonds—good quality, triple A rated municipal bonds and high quality corporates—nine percent on the corporates and six percent on the municipals. This is the biggest disparity in the history of the United States in terms of the interest rate of the 30 year treasury and that of the 30 year triple A rated municipal bonds. It’s just an incredible opportunity for people to get some wonderful investments. J. JOHNSON: You know, Mark Twain once said something to this effect, “History doesn’t repeat itself, but it often rhymes.” And along with that, we are not totally abandoning certain industries or certain sectors of the market. For example, even though oil prices are down quite a bit—about 50 percent from where they were just a short period ago—it doesn’t necessarily mean that you just abandon the whole energy sector, because people still need to pump gasoline into their car and people have to flip on the furnace this winter. It’s more of an anomaly as opposed to a long-term game changer. BIRD: There are some great brands and great franchises. Those strong brands are going to continue and the franchise is going to continue, just as Newburger Burman, which is a division of Lehman still exists. So we have to be aware of this as we go through this retrenching and deleveraging—if you own these leveraged entities, there is a pretty high probability your percent ownership, at best gets diluted down and at worst it’s a WaMu or a Lehman. I’m seeing so many companies trade on liquidity, not on value. So I think there are opportunities, but we are still really nervous about the balance sheets, and I know there will be some of the companies that just come rocketing out with no further dilution. HOLMGREN: During the last several months, we’ve had all the companies saying, “We’re great, we’re fine, we’re strong,” and then they crash. So there is this confidence of, well, you say you are a good company. And there is going to be a period of time that people are going to be pessimistic until the earnings really come out and start showing that there are some good companies still standing. It is interesting that we’ve gotten so used to these 600, 700 point swings in a day on the Dow. We might end up 200 points up or 400 points down. The reality is that it’s going to be interesting to see when this starts entering back in if there is just going to be a huge run up and then we’ll adjust to where the value really should be. So we’re kind of in a strange day-and-age when you can walk through the door and say, “Well, we could be down 500 today or we could finish up 300.” SMITH: It is a wild time. McQUEEN: I think people are really starting to see what risk is. There was such a low premium for risk a year ago that people could leverage themselves and not worry about it. And there is always risk in the market; that is how you get a return. That is probably why people are sitting on the sidelines a little bit nervous until they can see how much of the risk is mitigated out. Now there is a premium for risk, and we’re seeing it because that’s what has created some of the crisis with the credit crunch with some of these companies because they can’t get any. HOLMGREN: And, there is risk in being too conservative. I’m having clients asking what our CD rates are, what our fixed annuities are. In hindsight, we should have been doing that six months ago. HENDERSON: One risk that’s really prominent is: How many of the foreign countries own our treasuries? About 56 percent of our treasuries are owned by foreign countries. Probably close to 40 or 45 percent of that percentage is owned by Japan and China. So we have a huge amount of treasuries in somebody else’s hands. Are there things that you would specifically advise your clients not do considering the economic environment? BIRD: There is so much concern out there. People are worried; they need cash flows, which is an environment ripe for fraud. And we have to keep our eyes open to help the public because there are so many opportunities to take someone whose cash flows from their stock, because they owned shares in a stock that has just taken. The dividend is gone, and they are looking for the magic bullet. And unfortunately, those magic bullets often kill you. FISHER: One of the things that Utah State Securities Department came out and said was, “Be careful because a lot of people are selling private notes.” There are good notes to buy, and one of the good notes to buy is bank notes that are in default. There are also good assets out there. The banks see assets all the time and they say, “Hey, this is a great note. We should hold it, but we can’t because of regulation.” So somebody needs to go in and buy those notes. Now is a great alternative for notes in general. S. NELSON: I’ve had clients call me up and they say, “I’ve been looking on the Internet or I’ve been talking to so and so and they say I should get into CDs or I should buy some gold.” I have them come in and we look at gold as an investment over the decades, and we see what an abysmal investment it has been. I ask them, “Well, what rate do you think you are going to get on a CD?” They tell me, “Oh, maybe three percent, two and a half right now.” So we look at their portfolio, and most of my clients’ portfolios are yielding for the total portfolio about four or five percent. And so I ask the question, “Well, now, you would like to get out of earning four and a half, five percent and go into a CD where you are going to earn two and a half or three, and you know your principal is never going to go up in value and you have a lot of opportunity, as you have seen in the past, for your principal in your account now to go up in value again. Which do you think is better?” And they usually calm right down and we don’t talk about it anymore. R. JOHNSON: This is a great time for people to look at opportunities of shifting value down to their family members. There are lots of tools that we can use in the estate planning area to shift that wealth, which I think most of us agree is going to grow dramatically over the next couple of years, down to those younger generations. J. JOHNSON: Because the markets are generally depressed, we’re seeing a lot of folks convert their IRAs into Roth IRAs—paying the taxes right now for the benefit of the long term, tax free status of having the Roth IRA. McQUEEN: I’ve always believed that the results we get are usually always perfectly aligned with the actions we are taking. We’re getting the results, the fluctuations and the worries and the concerns because our savings rates are the same or lower than where they were in the Depression in 1932. In the United States, we have lived way outside of our means. So, I actually look at this as a wonderful time to bring us back to the realities of life. This is a great time to put back the values that we as a country need to have. HENDERSON: We are coming back to principles that have created wealth over long periods of time. If we clean up, we may be coming into one of the best times for equity ownership that we’ve seen in decades. And that is exciting because we are coming back into very basic financial principles. WALLACE: I agree that we may become better savers. That could have a short term negative effect in that it could push the economy into a deeper recession, but I think it would have positive long-term effects. We are such a consumer driven economy, though, so it’s going to take a little unwinding, and that whole deleveraging process could push us into a deeper recession than perhaps otherwise would have been. HOLMGREN: I don’t know who the quote came from, but my dad always said he looks at my generation and laughs because we say, “Live within your means, even if you have to borrow to do it.” So I’m hoping that people go back to living more within their means. But I guess there will always be a segment of the people who are going to have the newest, latest gadget and are going to drive a car regardless of how much gas it consumes. But I’m hoping more people get that message. PETERSON: The point of maximum pessimism is often the point of maximum opportunity. I think we need to be careful to temper the pessimism that we have because certainly there is a lot of negativity that’s out there. But, we are wired to “fight or flight” and too much of it is flight when there is perfect opportunity. How is the economy specifically impacting Utah? What oppor-tunities and warnings would you have for those living in the Beehive State? HENDERSON: Utah is experiencing a 3.5 unemployment rate versus 6.1 on the national level. Some in the state have not quite yet realized that when the economic trouble really hits us, it may hit us with a storm. There needs to be a bit broader awareness. I don’t know if it is because of our culture or because we do have a pretty good economic engine in Utah. We are also good consumers, so maybe we’ll last up to the bitter end because we continually consume. We also love debt when compared to the rest of the nation, so I have some concerns about Utah in that regard. CLARK: We do consume more than a lot of other regions, and it’s going to come back to haunt us. People need to take advantage of the market. But they also need to realize the realities. Maybe people will need to work a little bit longer and have emergency savings, for example. People need to do more because we can’t always rely on the government. C. NELSON: There has always seemed to be a time lag in the state of Utah. It’s a good thing, and yet at the same time, it can be a little bit of a problem in that, again, maybe we don’t all realize what’s going on in the economy. But there are some bad things out there that still haven’t affected us yet that probably will and should. BIRD: When looking at Utah’s cultural lack-of-savings issue, I’d like to believe that the light switch is going to go on and we are going to have a cultural shift to saving. But, there is a dramatic entrenched industry that benefits from our lack of savings: the use of credit. We need a vibrant, strong financial services industry to support our diverse and broad economy. But we don’t need our diverse and broad economy supporting the financial services industry. I think circling back to the comment about the volume of treasury securities as well as equity in this country that is owned by non-U.S. citizens overseas, whether I like it or not, as an investor, I want to invest in those companies that are going to have the cash flows, that presently have a high savings rate, that actually put that money to work in their own countries, that presently are receiving the rent payments from us because they loaned us money or they own our assets. Those are the economies that have a higher likelihood of growing fast. Debt, unless it is used to build productive capacity, is a drag on you, whether you are an individual, a corporation or a government. And once again, whether we like it or not, as individuals, we have a lot of debt. As corporations, we don’t have a lot of debt, except for really certain sectors of the economy—but a lot of our companies, their balance sheets are clean. But certainly as a government, we have a lot of debt. And eventually you have to pay that debt down and there is a cost to it. So I think it behooves us all to be looking in those countries that are receiving the rents, not paying the rents. How is the credit crunch affecting business owners? J. JOHNSON: We are likely going to see some tax changes in capital gains, dividends, income tax rates and corporate tax rates, so we’re trying not to have our clients over rotate with some of those things because sometimes they can let tax related decisions impede them from making the right investment decisions. Still stocks have proven to be the best place to be for the long haul. Being diversified and being sensitive to tax issues, while still staying invested and getting a good return is the ultimate objective. FISHER: And not letting the tax tail wag the dog. At the end of the day, we all talk about taxes and if 15 or 20 percent of the portfolios are down 25 or 30, a business is devalued 30 percent. Business owners have got to keep in perspective long term goals. BIRD: It’s so easy to get caught up on marginal tax rates, and I think most people vote on what they are going to be taxed today. We all have blinders on and we manage each crisis by crisis. Yet, right now we’re paying $400 billion a year in interest on our debt. Our debt has doubled in the last eight years. I think the tax rates matter, but at some point we need to think about who we are loading the bill onto. Are we being good stewards to pass to our children the obligation to not only pay off the debt we ran up because we were having a great party, but to pay for our Social Security, Medicare and Medicaid? I am not optimistic that we will confront the mess we’ve made, but we are remiss if we don’t accept that we’ve run up debt and we do have some duty to pass a better world on to our children. We’ve tried for years to drop tax rates, and dropping those rates has grown the economy, but it has not increased tax revenues at the same rate. Now, one could argue that a 100 percent tax rate kills the economy and it does. But, so does a zero percent tax rate. What is appropriate? HENDERSON: I’m all for financial responsibility and we should all be responsible. But I believe it may be time to clean up Washington. There is a lot of waste throughout many, many areas of government. The second thing is, we can look economically throughout the world where those countries grow and what their tax rate is on the corporations, what our tax rate is on corporations and whether it’s a ball and chain or whether it’s being socially responsible. We need to clean government up and start being a little better on how we allocate funds. Regarding the economic storm we are in, what one piece of advice do you have to help individuals stay afloat? S. NELSON: In spite of all of the rhetoric and all the talk and all of the advice that you hear in the news, we can’t control what happens individually. We don’t have a lot of control over the economy. All we can do is control our investments and how we manage our own finances. And if we do that properly, if we focus on good quality, diversify properly, have cash on hand for a rainy day, we are going to be able to do very well over time and history has shown that. BLAND: If you are looking at getting financial advice, bring together a team of experts. Bring a CPA to answer these tax questions. Bring in an estate planning attorney and bring in an insurance agent and then bring in an investment advisor. McQUEEN: The Peterson Foundation has a 40-page report that talks a lot about our responsibility. In the report, someone said, “What we do is individually talk to people, individually help them understand principles, individually get savings and individually invest properly.” We do it one-on-one because individually we got into the problems and individually we’ll get out of the problems. There is no silver bullet. POULTER: When it comes to investing and when it comes to saving and borrowing, be reasonable, be wise, hold fast to the fundamentals and take responsibility for your individual situation. WALLACE: Try to get away from that short term view and the day-to-day volatility. Try to look historically as to what has happened. We have been here before and there is kind of a pattern. With a long-term perspective, you can increase your odds of success. PETERSEN: I’ll add a Warren Buffett quote, and that is, “The market is an efficient mechanism for transferring wealth from the active to the patient.” So make sure your time perspective matches your investments. C. NELSON: Stay true to yourself and your principles. Don’t change based on emotion or fear or greed or current market trends. CLARK: Many people believe that the day they retire is the day they need all of their retirement money. Recognize how long you are going to live and segment your portfolio and invest appropriately according to your needs. J. JOHNSON: Resist the temptation to make emotion based decisions. For those who are sitting on a lot of cash, if you are waiting to feel more comfortable before getting back in the market, by the time you feel more comfortable, you will have missed out on probably a pretty good run up in the market. HOLMGREN: Have a comprehensive plan and keep your head when everyone else is losing theirs. FISHER: Work with an advisor who can help keep that long-term perspective. As consumers, we’ve got to be careful not to get scared into a hole. If we get in that hole, we cause the problem to continue and it rapidly snowballs. HENDERSON: Spend less time listening to national figures and really spend more time on principles. Let the principles that built this great country guide us through this. R. JOHNSON: I’m optimistic about the future. I think there are lots of opportunities. I think there are investment opportunities, and I know there are great opportunities within the estate planning area. The key is to get good advice, do your homework, develop a long-term plan and then stick to it. BIRD: Spend less than you earn. Make sure you have money set aside for a rainy day. Invest in yourself. Odds are you are going to be working longer than you thought you were. Invest in yourself to increase your productive capacity and do something you enjoy. And finally, to the extent you have money available for longer time horizons, know what the time horizon is and take advantage of the opportunities today and invest accordingly. MARTINEZ: We’re all going to learn a lot through this and I think we’ll look back on it and really know that there was a shift that was going on. And hopefully it’s a shift in the direction that will let us get back to some of those traditional values.
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