Talk about market capitulation.
What we are witnessing is wholesale investor capitulation.
If the onslaught of bad economic news has one bright spot, it's that it will have a lasting and significant impact on the way investors approach the markets, retirement and mutual fund investments.
Chasing double-digit returns and taking on risk is being replaced by safety, wisdom and satisfaction with decent yields. Investors' newfound respect for guidance, years of market knowledge, security and guaranteed income, could actually be a watershed moment for financial advisers and the mutual fund industry.
Amazingly, U.S. investors rebounded from the crash of 1987, the overleveraged dangers of Long Term Capital Management in 1998, the baseless dot-com euphoria of 1999 and the shock waves of 9/11 in 2001.
But this time, it's different. It would be hard to imagine investors flocking to a hot investment and a flurry of billions of dollars pouring into the stock market itself contributing to surges in the Dow. The simultaneous upending of the investment management, mortgage, banking, credit and capital market industries puts us at an historical juncture. Questions about the viability of capitalism are understandable, given America's initial responsibility for the worldwide financial crisis.
Today's investors have become overwhelmingly wary of stocks. Many are increasingly dubious they will ever be able to retire.
We can take advantage of this change in sentiment to offer them blue-chip investments and a sound plan for preparing for retirement. What they need to hear is how the credit markets are improving and where there are buying opportunities amid the distressed stock prices.
Of the biggest fund companies in the nation, Fidelity Investments is probably doing the best job of addressing the market turmoil and making a case why investors should continue to believe in investing, in general, and staying with Fidelity, in particular.
Not only has Fidelity been running full-page advertisements in the financial papers to try and allay investors' worries, but its entire website is devoted to answering investors' persistent questions and fears, under the banner headline, "Helping Customers Through Uncertain Markets: Benefit From Our Experience and Leadership."
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