Bo, this article bothered me. It may be true. What's your reaction? tia. all the best
September 23, 2001
MARKET WATCH
Grim Realities, Here to Stay
By GRETCHEN MORGENSON
Investors like to look to history to divine what might happen next in the financial markets. But across the nation, from the smallest stock market dabbler to the largest institution, investors are facing an adversity unlike any experienced before. Even stock market veterans who survived the bear market of 1974 say that comparisons to that painful period are of no help.
There are investors who specialize in analyzing industries under stress and identifying companies with the best shot at a comeback. One of the most able and experienced of these investors is Martin J. Whitman, manager of Third Avenue Funds, three mutual funds that invest in companies whose stocks are cheap despite having solid balance sheets and good earnings potential down the road. His experience may give investors some guidance for what lies ahead.
Mr. Whitman's performance has been enviable. For the three-year period ended Aug. 31, the average annual return in his largest fund, Third Avenue Value, was 19 percent. The fund has lost 12 percent of its value this year, but one of his other funds, Third Avenue Real Estate, is up 6.4 percent for the year, while Third Avenue Small Cap is down just 1.6 percent.
Where Mr. Whitman can provide value to all investors is in his perspective on the current investment scene. He is a man who calls 'em as he sees 'em. His prognostications are not the sugarcoated version of what may transpire — like some of those emanating from big Wall Street firms.
His macro view is simple and dark. "I don't think we ought to be worried about the recession," he said.
A far greater concern is what he calls permanent impairment, an accounting term that refers to an asset that has been so damaged that it will never return to its previous value. He argues that some industries have been permanently impaired by the events of Sept. 11.
"We will never again go back to the way things were in the airline industry, hotels, in small property and casualty reinsurers, maybe computer box manufacturers," he said, though the computer problem predated the terrorist attacks. "And things may stay bad for an indefinite period." |
