MADISON, Wis. — The Federal Reserve’s move to save American International Group probably did little to calm investor fears, but financial advisers continue to beat the drum for staying liquid and seeking out opportunities to augment long-term goals.
“These feel like unprecedented times in terms of the magnitude of systemic financial problems that have made their way through the global financial system, essentially taking down venerable firms like Lehman Brothers and Bear Stearns while essentially ‘nationalizing’ Fannie Mae, Freddie Mac and AIG,” said Scott Powell, managing director, common stock and managed account program for MEMBERS Capital Advisors, in yesterday’s MarketLine alert.
If there is a bright side, Powell said investors can “create tremendous values and opportunities for those that can stomach the current volatility and are able to look forward three or more years out.”
“While many might look at today’s current market downdraft and proclaim a bottom is in sight, we believe that ultimately, U.S. housing prices must be stabilized in order to stop, and then reverse the negative ‘mark down’ spiral that is playing out,” Powell said. “Until that happens, the likelihood of an economic turnaround occurring is being pushed further into the future and investors need to protect themselves by having short-term liquidity in place in order to ride out these market conditions with their longer term portfolio.”