It's difficult to turn our attention to the markets this week, but Monday's resumption of stock trading forces the issue. As we noted last week, most fund investors should fight the urge to buy or sell shares, tapping money market funds first for any cash they might need.
For a slightly broader view, we put some basic questions to a few money managers via email last week. Bill Nygren, manager of the
(OAKMX Quote - Cramer on OAKMX - Stock Picks)Oakmark fund, and Bob Turner, manager of the Vanguard Growth Equity fund, were kind enough to share their thoughts.
TSC: Are investors' accounts safe?
Nygren: Yes, accounts are safe. Even firms whose primary records were destroyed have backups in other offices. Investors should not worry at all about account safety.
Turner: Investors' accounts are safe. Redundant systems are in place, mainly due to the Y2K scare.
TSC: What would you tell investors as they try to process what's happened?
Nygren: Like other Americans, we are so outraged it is hard to shift gears and think about stock prices. But it is our job to be thinking about stock prices. Business values drive stock prices and long-term business values have fallen only modestly, if at all. I would encourage investors to be calm and not alter
their long-term investment programs.
Turner: I'd simply encourage investors to keep a long-term horizon with their investments.
TSC: Is there any precedent in the past for what's happened -- anything that might inform us now?
Nygren: As much of the financial media has been reporting, stock prices have generally risen following disasters like the Gulf War and Kennedy assassination.
TSC: Do you expect widespread selling when the market reopens?
Nygren: Most international markets are down a few percent since we were last open. It would not surprise me if our market had a similar decline immediately. If such a decline occurs, I believe it will be a buying opportunity.
Turner: In the near term the attacks could cause the market to test or even break previous lows. But a normal economic recovery, which we believe was materializing before this disaster, might be boosted by aggressive monetary and fiscal stimulus in its wake.
TSC: Will the attacks have a major effect on the economy?
Turner: Near-term economic weakness associated with the disaster could be offset on an intermediate-term basis. The reason is the aggressive monetary and fiscal stimulus I think you'll see in response to the attacks.
Nygren: Some specific industries will be very hard hit in the short run -- especially those that depend on business travel or tourism. Across industries, September will be a weak month. Long term, however, the effects ought to be minimal. It is that confidence in the long-term effect being minimal
that leads me to say that if the market starts Monday with a knee-jerk decline, I want to be buying.
Ian McDonald
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