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Last 2 years have shown wisdom of staying in stocks

Updated: May 3, 2013 12:14PM



Originally published: September 11, 2003

For me, it’s impossible to let this second anniversary of the Sept. 11 terrorist attacks go by without at least some reflection and assessment of what happened then, and where we stand now -- at least in terms of our financial markets.

On Sept. 11, 2001, our free-enterprise system came under attack and our financial markets closed for several days. The Dow had closed Sept. 10 at 9,605. When the markets reopened six days later on Sept. 17, the Dow dropped to 8,755 before closing at 8,920. But the real market lows for this bear market were actually made less than a year ago, on Oct. 7, 2002, when the DJIA fell to 7,368.

And here we are, back at 9,420 as of last night.

So what does this market action tell us? It tells us that we did survive and prosper, as I suggested in the column I wrote that day. It tells us that mass fear is often a buying opportunity, just as mass greed is a signal to sell. And, more humbling, it reminds us that no one can ever call tops and bottoms, but that a program of long-term investing is a way to grow rich slowly.

And since I believe that, I announced that I would buy 100 shares of General Electric, America’s largest company, when the market reopened after the post-Sept. 11 hiatus. That first 100 shares cost me $36.35 each -- a seeming bargain for a stock that had traded in the mid-forties the week before. But the stock fell even further in the coming year. And last Sept. 11, I purchased another 100 shares at $30.15. What to do now? Today I have given a market order to purchase another 100 shares of GE, which closed last night at $31.03.

Now, there’s nothing special about this one stock--just a symbolic tradition I’ve created, as I said then, both as a gesture of defiance and a sound investment strategy. And looking back, especially on the big move this year, aren’t you glad you kept investing in your stock funds on a regular basis in your 401(k) plan -- even when times were most fearful?

Letters from readers

My recent column about banks’ ATM fees certainly drew some attention. Obviously, many of you share my feelings about being tied to one big bank because of its omnipresent ATMs. Others voiced different complaints:

“Here’s another thing big banks are starting to do which irritates me no end. ...Bank One no longer accepts deposits to their ATMs from non-Bank One customers. Somehow it seems to me that if an institution joins Cash Station network, they ought to be required to offer the same services across the board.”

Several notes were quite helpful:

“My bank just started offering totally free ATM withdrawals at any ATM and a surcharge rebate. They credit my account $2 for every surcharge up to $10. ...It is Citizens Financial Services.”

Robert Yohanan, CEO of First Bank and Trust, writes: “May I suggest you and your readers bank at any of the 101 financial institutions in our area that are members of the Starsf network. (The “sf” stands for “surcharge free.”) Most of the independent banks in our area are members. In fact there are over 1,025 surcharge-free ATMs nationwide, so you can access them when you travel. For a listing of Starsf members please check www.star.command.com and search for Starsf locations.” Several others wrote with the same information, so check it out.

David Manning of the Community Bankers Association of Illinois wrote that Illinois’ “antiquated banking laws,” which I bemoaned, have resulted in “more competition and lower costs for consumers as a result of that fragmentation.” In states that have fewer competitors, he said, fees are higher. Can you imagine the surcharges if just a few banks controlled all the ATMs?

I’ve always thought that actions speak louder than words. So I was particularly pleased when Washington Mutual announced it is expanding in Chicago in a big way, adding 70 offices, and its ATMs will also be surcharge free. Maybe the banks are getting the message!

In fact, choice is a key ingredient of our free-enterprise system. And if enough people exercise choice, the market responds. That’s why our investment markets are so important. It’s where investors, and their capital, choose the companies most likely to be profitable and give a good return on investment. That return is ultimately dependent on the free choice of both business and individual consumers to purchase products and services they like, thereby rewarding the companies that provide them.

That’s what makes the free enterprise system the very best economic system ever developed -- and one we should treasure. And that’s The Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange and McDonald’s Corp. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast, and can be reached at her Web site, www.terrysavage.com.



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