I've had a chance to speak to many of you personally about the remarkable market decline we've experienced, but also wanted to put some thoughts in writing.
No doubt we are in unprecedented times. I think the government will come to regret the fact that they let Lehman Brothers file for bankruptcy as that has apparently trigger a crisis of confidence in the global financial markets which is spilling over into main street. But as I heard one commentator state, after the government decided to let Lehman go under, "If they didn't get it right now, they'll have to get it right later." Well now we're in the middle of "later."
As we monitor this fast and furious decline, it is apparent to me that the people selling at these levels are doing so for one of two reasons:
1) they have no choice, or
2) they believe that we will be experiencing an economic contraction on pare with the Great Depression
I am certainly not in the first category and believe that I have positioned our clients portfolios appropriately so that you are not either.
I am also not in the second category. Yes, the economy will contract, but I think the massive coordinated response to this crisis, which did not exist in the 1930s, will limit our downside.
As a final note, Warren Buffet, the head of Berkshire Hathaway and the second richest man in the world, has taken on iconic stature in our society. He plays the wise old grandfather whose advice is always right -sooner or later. I've invested in his company for over a decade and always take what he says to heart. He was interviewed recently by Charlie Rose and it's worth listening to: https://charlierose.com/videos/11747 He has a very rational take on the current situation. My take away is this: Buffett has great confidence in the long-term hrealth of the American econmy. He has sat on $40 billion in cash for years waiting for the right buying opportunity, and is now putting that money to work. If Buffett is a buyer than I am not a seller.