Good evening,
While the Oracle of Omaha has evolved into a kind of two-legged “Good Housekeeping Seal of Approval,” the market shrugged that off and paid attention to the rampant tsunami of mutual fund redemptions. This is said to be forcing funds to sell securities and as a result is wreaking havoc on us all. Naturally, they sell their winners so their performance isn’t dragged down. Selling those winners results in a capital gain for the fund holders - should be an interesting year as far as tax consequences.
As my mentor said to me this morning, your job is not to find blame your job is to find your clients the investment vehicle that will produce for them what they need. With that said, there are some seriously good buys out there for the long term. I saw a report today labeled “Fine in ‘09” and I’m not sure that will come to bear – no pun intended – but I do believe the rough edges will begin to soften.
Today’s drop is no mystery so I’ll leave you with a bit of levity!
"A tournament, a tournament, a tournament of lies.
Offer me solutions, offer me alternatives and I decline.
It's the end of the world as we know it and I feel fine.
(It's time I had some time alone.)"
- Lyrics from R.E.M., 1987
Sources: Art Cashin-UBS, The Economist, and The Financial Times, October 2, 2008 US Edition. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of October 2, 2008, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Merrill Lynch to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
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