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Local Clients Edgy, Not Panicking, Brokers Say

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By MICHAEL SASSO

The Tampa Tribune

Published: September 20, 2008

TAMPA - Local stockbrokers and investment advisers ought to be tearing their hair out about now as they try to calm frantic investors, right?

However, local investment pros insisted that wasn't the case this week. Sure, some investors needed reassuring words, but for the most part, clients didn't rush to dump their stocks, bonds, mutual funds and other investments. Their most common concern was whether their investment portfolio was diversified enough with the right mix of investments.

Brokers encouraged clients to consider the downturn a good time to buy at low prices, rather than selling off their investments.

"I don't have what I call panic liquidators," said Rick Metzger, a senior financial consultant with Wachovia Securities in Tampa.

Brian Mahoney, branch manager for Charles Schwab's Tampa and Pensacola regions, added, "I expected our volume to increase, and we were prepared for it, but because of the firm's tenet of remaining diversified, it just did not happen."

Several brokers this week reported a higher-than-average number of calls from clients, but no one reported a huge surge of panicking investors. Brokers generally said they preach diversification, so that their clients aren't too heavily invested in any one company's stock or bonds, particularly financial stocks.

Gary J. Stempinski, a financial adviser with Raymond James & Associates in St. Petersburg, said none of his clients were invested in mortgage companies Fannie Mae or Freddie Mac or in insurer AIG, all of which were bailed out by the government or Federal Reserve in recent weeks. A few clients have some exposure to the investment banking firm Goldman Sachs and Bank of America, which have been wrapped up in the financial mess on Wall Street but are thought to be in better shape, Stempinski said.

One client called Stempinski nervous about what to do with a Goldman Sachs bond that she owns. Hang on to it, he told her, because despite the crisis on Wall Street the bond is "A-grade paper."

"If you want to sell that bond, today is not the day to sell it," he said.

To be sure, some investors and nonprofit groups were sweating the Wall Street headlines this week.

The trading volume at Grace Financial Group, a Tampa firm that trades stocks, bonds and other investments for wealthy investors, may have quadrupled this week over its normal volume. Unlike other brokerages, Grace Financial facilitates trades but doesn't pick investments on behalf of its clients, said company Senior Vice President Rodney Carrasquillo.

Because companies such as AIG are so widely held by mutual funds, "Even in well-diversified mutual funds, there's nowhere to hide in this market," Carrasquillo said.

Eric Bailey, managing principal of CapTrust Financial Advisors, a Tampa firm that advises institutions and wealthy individuals, said nonprofits faced a double-whammy this week. Donations from the public have been way down recently because of the poor economy. Meanwhile, they worried that their already-low endowments might be jeopardized by the stock market turmoil, Bailey said.

Eventually, nonprofits might want to move some of their money into less risky investments than stocks, but they shouldn't dump their investments out of fear during the current crisis, he said.

Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.

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