“Advisers Nudge Fearful Clients Toward Stocks,” by Daisy Maxey, Dow Jones.
“Fear is a stronger emotion than greed,” said Todd Morgan, senior managing director at Bel Air Investment Advisors in Los Angeles, which advises about $6 billion in assets for high-net-worth investors.
Morgan has changed his call since August, when he told clients, “It’s too late to sell and too early to buy.” Now, he said, “the stock market is worse than the economy, and stocks…are very, very cheap.” But he added, “people are frightened.”
Morgan moved his high-net-worth clients heavily into bonds just before the market collapse in 2008 and they never came out, he said. “Our clients went into a bunker, then the storm hit and after the storm people didn’t want to get back in,” he said. He’s just now starting to convert small amounts of bonds into equities, but said, “People have a muscle memory of 2008 and early 2009; it’s hard to get them to put more money into equities.”
Some investors are losing patience with the market’s volatility, he said. “I’m trying to encourage people to stay the course,” said Morgan. “When it’s time to go up, markets go up 2%, 3%, 4% a day for a week, and there’s no time to get in. By the time you say, “I feel comfortable now, everything’s OK,” the market’s up 10%, 15%.”
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