I Remember 02.26.2009
I remember February 26, 2009 very well. It was the day I started getting emails from clients who had money managers that were buying stocks in a terrible market. It was a stock and bond market that had been dropping since September the year before. Remember, we don’t manage money, but only watch what others do and make recommendations.
Jim Cramer was to blame, I reasoned, since he had said “go to cash” or at least that’s what the media was repeating. Actually, he said if you need cash in the next five years you should sell to raise it. It was the beginning of the end. We call it “capitulation.” Thanks be to Jim Cramer.
Capitulation means that anyone who might sell in a panic had already done so and there are no sellers left; only those who will hang on through good and bad markets.
So in early March 2009 I suspect the holders on looked around, saw no more sellers, and reasoned it was time to buy. Most money managers of our clients had already started buying and clients were contacting us to find out if these managers had gone off the deep end.
No loss of reason for those money managers, we replied to clients. They were practicing the time tested strategy of professionals to “buy low and sell high.” They had no idea where the bottom was, they opined, but were just doing what their investment policies demanded. Nine months later we knew they were correct. At the time, it scared “the living daylights” out of some of our clients.
So I suspect that before too long we’ll be seeing those same kinds of worried emails from some of our newer clients with money mangers who are starting to buy when the market is going down (in the client’s mind). I just wanted to put down on digital paper (blog) my recollections, so I’m prepared once again to remind our clients and readers of Warren Buffett’s famous quote: “Be fearful when others are greedy, and be greedy when others are fearful.”
Turn off the TV. It’s just drama to get you to watch the ads. If you must watch, try TMC. My wife loves the old movies. You will too. It’s a better kind of drama.