Investment Common Sense is Timeless...Market plunge a wake-up call, broker says.
A lot of people wish they’d known last week what the stock market was going to do. At least one person around here did. Daniel Lerner, a branch manager at Coral Springs-based David Lerner Associates, has been telling anyone who would listen that the market was going to correct.
Sure, you say, those fears are always around. But not in Lerner’s case. Lerner, the son of an economics and history teacher—turned—stockbroker, had a long discussion with a reporter last Wednesday. Not about pessimism - the thinking that what goes up must come down. But about emotions. About illusions. And about owning things of real value.
Lerner, who came to Florida in July from his father’s David Lerner Associates office in New York, said he couldn’t believe what he found here: Elderly people who have a significant portion of their money in the stock market. Non-stop radio shows, paid for and hosted by brokers who pretend to be independent financial experts - trying to convince everyone, they can make a killing. Safely.
“I would listen to the talk station, and it gives me a headache,” Lerner said. “You would hear these brokers quoting stock the way they quote a horse. You’re quoting odds almost.’’ That day, Lerner said he was sure the market would correct, probably soon. It was puffed up to ridiculously false values by the large number of people who put their faith in it. But if you looked at the actual values of the companies compared with their future earnings potential, the market levels made no sense.
“People have become so hypnotized by the rates of return on the market that they’ve pulled out of investments where they really do belong and gotten into investments where they really don’t belong.” Lerner’s company operates on the philosophy that if the market crashes, it should be no more than interesting dinner talk. He believes most investments should be in things that are based on real products with true value.
Some may call that conservative. Some may call it smart. Others — the ones who worship the stock market may call it stupid. So what kinds of investments are his clients in? If you’re a retiree, at least half of what you own should he in guaranteed investments: tax-free municipal bonds, Treasuries, “things like that.” he said.
Echoing his father, David Lerner’s sentiments, “This past week’s correction was just a wake-up call, Lerner said. “It came and went away. We’re not necessarily going to be so lucky next time. To say that there’s not going to be a next time is deluding yourself. Nobody can tell you that a huge correction is going to reverse itself on the very next day.”
Lerner is passionate about the market. But he’s most concerned about what he sees as the market’s grand illusion. “I feel like I’m trying to save souls.”
Reprinted with permission from SECTION D
The Palm Beach Post 1997
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