The Buckingham Report

Despite the economic ‘Green Shoots’ we’ve been seeing and the sizable rebound that the equity markets have enjoyed since the March 9 lows, we still can’t get through a business publication without seeing a reference to the Great Depression. Certainly, we are not making light of the troubles faced by many Americans, but the official unemployment rate remains in the single digits and most economists are projecting stability and perhaps the return of economic growth later this year.

Of course, we know very well that fear sells, especially in the financial world, as a glance at the business books receiving prominent display at the local Barnes & Noble will attest. And along with various tales of the market meltdown, coming in at #3 on the latest New York Times Business Best Seller list is The Ultimate Depression Survival Guide by Martin D. Weiss.

Interestingly, the Weiss book moved into The New York Times ranking previously held by The Great Depression Ahead from Harry S. Dent, Jr. Not trying to pick on Mr. Dent, as he has done a terrific job through the years of playing on the twin emotions of fear and greed, but history shows that once the pendulum has swung too far in one direction, it often reverses course. Don’t believe me? Consider two previous Dent publications, a 1998 title called The Roaring 2000s: Building the Wealth and Lifestyle you Desire in the Greatest Boom in History and a 2004 title called The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010.

Same thing holds in the broadcast media world as evidenced by the ‘Stewart’ commercials run by Ameritrade in 1999. Here, the message was that investing was so simple that even a ‘slacker’ could do it.


http://www.youtube.com/watch?v=WOKDK0g1Gno

Mr. P: “Stewart, I just opened my Ameritrade account.”
Stewart: “Let’s light this candle.”
Stewart: “It’s easier than, ah, falling in love. What do you feel like buying today Mr. P?”
Mr. P: “K-Mart”

Good thing Mr. P. didn’t opt for 500 shares as K-Mart dropped from $17 when the commercial broke in March 1999 to $10 at the end of that year to zero today.


http://www.youtube.com/watch?v=ONZFkqzuMjI&feature=related

Later, after convincing the masses that they could easily invest on their own, E-Trade in 2001 finally advised folks to ‘Invest Wisely’. Never mind that customers of the discount brokerage likely would have gone gaga over TieClasp.com or PimentoLoaf.com if they had come public back then!


http://www.youtube.com/watch?v=-RySbEBNLXM

Not surprisingly, the brokerage house marketing departments have been spinning a very cautionary tale of late, with Charles Schwab launching a successful campaign touting the firm’s money market and CD offerings right around the beginning of March. Not exactly the best time for the ‘lifelong investor’ in the commercial to be bailing out of stocks by ‘shoring up’ her portfolio in order to ‘stop losing it’ and ‘start saving it’, but Schwab is a superb marketer and the message resonated well. In fact, Schwab reported that $3.3 billion in net new assets were brought to the firm in the month of April.

Interestingly, Schwab has since dumped the ‘Shore Up’ commercial from its Web site as both the firm’s namesake and its Chief Investment Strategist have struck a more optimistic tone in recent weeks. And I just saw a billboard in the Bay Area that said something on the order of, “If there’s a return trip, I want to be on it.”

Hopefully, it will be a long time before the Schwab marketing whizzes get around to a “Happy Days are Here Again” campaign! After all, we never forget the timeless advice to be greedy when others are fearful and fearful when others are greedy. And with some $3.8 trillion still parked in low-yielding money market funds and most pros expecting a summer selloff, we believe that there is a big wall of worry for stocks to continue to climb.

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Al Frank Asset Management, Inc. (Al Frank) is an Investment Adviser, registered with the Securities & Exchange Commission and notice filed in the State of California and various other states. All material published by Al Frank is subject to change without notice. These materials are the opinions of Al Frank and the performance of any investing strategies discussed, as well as securities mentioned are subject to risks and uncertainties beyond the control of Al Frank. Additionally, these materials should not be considered investing, tax or legal advice. All investing involves the risk of loss as markets are inherently volatile. Small and mid-cap stocks are typically more volatile than large cap stocks. All materials not published by Al Frank are considered outside the control of Al Frank and are not representative of its views or opinions.