Advisers Tell Investors Not To Sell as Debt Deadline Nears

[TomClash]

Source: Bloomberg

“There’s really just not a whole lot that you can do,” said Paul Jacobs, who’s a financial planner based in Atlanta for Palisades Hudson Financial Group, which manages more than $1 billion and whose clients have an average of about $20 million in assets. “You can’t just put it all in a money-market fund, because then if there is a nightmare scenario there’s really nowhere to hide.”

Al Vazquez said he’s been holding more cash in his clients’ accounts than he normally would, in anticipation of the debt- ceiling debate coming to a head.

“I think there’s a 99 percent chance it will be satisfactorily resolved,” said Vazquez, an adviser with LPL Financial in Gig Harbor, Washington. “There is a potential for a black swan, or maybe in this case a black turkey.” A black swan is a difficult-to-predict event with wide-reaching implications.

It may be too late for investors to take defensive steps because the time to do so is before a crisis, and because the effects of a U.S. default or downgrade on different investments is difficult to predict, said Robert Arnott, chairman of Newport Beach, California-based Research Affiliates LLC, which oversees more than $80 billion.
“We’re entering unknown territory,” Arnott said.

Talking to clients who are concerned about the debt-ceiling debate can be an opportunity to reassess their risk tolerance, said Jane King, president of Fairfield Financial Advisors, which manages $120 million for about 100 clients. “If we’re at the right level of risk, stay put,” King said.

Read more: http://www.bloomberg.com/news/2011-07-28/default-a-black-turkey-as-advisers-tell-investors-not-to-sell.html

[DJ13]

1. I remember them advising the same thing back in mid 2008

How did that work out?

[Warpy]

3. It worked out quite well

Those of us who sat on our hands and refused to panic have gotten it all back plus the income it generated over the past 3 years. That puts us ahead of the panicky folks who sold low and stashed the money in low return "safe" places.

Panic is absolutely the worst reason to make a financial decision.

[sharp_stick]

5. Absolutely

A colleague at work dumped his entire 401k into money market funds at the bottom of the market. He's still trying to recover and he will be for a long time to come.

[Roy Rolling]

9. good,..

that is a "good" strategy, but those who sold at the highs and bought at lower prices sidestepped the whole debacle. They are called "Goldman Sacks" :banghead:

Even more fortunate were those who were long prescious metals since the 90's and are now cashing in.

[Warpy]

13. It helps if you are one of the causes of a financial meltdown

because you do have adequate warning that it's coming.

That's also called Goldman Sachs.

[dmallind]

6. Worked out great.

By not panicking and riding it out my main "static" 401k (no longer adding to it) now has about 15% more value than it did in mid 2008. People who bash equities investments always forget about dividends...

[joeglow3]

10. As Buffet says, buy when others are selling and sell when others are buying.

I kept my investments in 2008 and kept buying until now. It worked out pretty well.

[Roy Rolling]

2. 2 things they will always say:

1. we need lower taxes to create jobs
2. don't sell ever

[FreakinDJ]

4. Now you know its time to sell

[neoralme]

7. It may pass, but we may be in for another act of deceit today or

tomorrow, but this time not by the white house. Certain Senate members may turn despite what they said and vote for Bonehead's plan. Then again, Bonehead's plan may not have the votes, nor will Reid's plan, and the compromise to get the job done may include a Special Congress to "adjust" entitlements. I trust none of these people. Fairfield Financial better be right, or they are history.

[truthisfreedom]

8. Can anyone say "run on the banks?"

I keep a lot of spare cash on hand. I have NO investments in anything other than hard goods. Of course there are safe places. One safe place for a 6 month supply of food is IN YOUR FREEZER. Well, as long as the power stays on.

[coalition_unwilling]

11. That's the rub isn't it? I've made sure our freezer, fridge and

cupboards are full of food. I've got spare cash on hand (although you can't eat paper currency). Final step will be to gas the car up over the weekend, so I've got a full tank of gas.

But if the power goes out, my freezer and fridge food will instantly become perishable.

Bottom line: I've done what I prudently can do to safeguard my wife and me against a worst-case scenario. But there's only so much urbanites can prudently do to hedge against catastrophe.

[UnrepentantLiberal]

12. In what scenario would your power be shut off?

[coalition_unwilling]

14. If the wheels of municipal government and publicly owned utilities were

to 'freeze up,' i.e., due to sudden absence of liquidity brought on by financial collapse, I could see power going out. If Los Angeles DWP employees are not getting paid and vendors of power to DWP are not getting remittances, where's the power going to come from?

I grant you, this is a Henny Penny sky is falling type of hypothetical scenario and one that I don't believe is likely, otherwise wife and I would have bailed out of LA ahead of this weekend.

[CountAllVotes]

15. please don't sell!

They need YOU and YOUR money in THEIR ponzi scheme deals.

These "advisers" make me quite sick indeed. :puke:

Why would I not sell if the UNITED STATES has been downgraded and could default?

To invest in this is insane.

[No Elephants]

16. Why is this starting to remind me of the Y2K predictions?