Industries

How bad is it?

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Print this page by Doug Childers

As the recession drags on without clear signs that the economy is recovering, comparisons to the Great Depression of the 1930s linger.  But from a wealth adviser’s perspective, how bad is this downturn, compared to previous recessions?

“This is the worst I’ve seen, and I’ve been an adviser for more than 25 years,” says Dalal Salomon, director/investment officer with the Richmond-based Salomon & Ludwin Financial Consulting Group of Wells Fargo Advisors.  “What made this downturn so bad is the fact that diversification, for the first time, did not help.  Everything fell in unison and fell significantly.  Even ‘safe’ investments such as money markets and CDs were being called to question for fear of bank failure and lack of FDIC coverage.”

Ryan Sprowls and Ted Dicken, managing directors of investments in the Alexandria office of Wells Fargo Advisors, also say this is the worst downturn they’ve personally experienced, and they point out that it has hit wealth advisers especially hard.  “It’s centered on financials, which is where we live, unlike the sell-off in 2000, which was painful but focused on technology,” Dicken says.  “This time, it’s personal, emotional and professional.”

On the other hand, William Calliott, senior vice president and financial adviser at Davenport & Co. in Virginia Beach, thinks the 1973-1974 stock market decline was at least as bad as the current one, even if most people don’t remember it today.  Many people who are now middle-aged were in their 20s then, “and most of them didn’t own stock,” he says.  “And people didn’t have 401(k)s or IRA plans back then, either.”  As he points out, many TV analysts offering warnings about the current market are in their 30s and 40s.  Their experience of the 1974 crash is confined to what they read in history books.

Of course, back in 1974 we didn’t have cable news shows documenting each uptick and downturn in the course of a day’s trading, and that sort of coverage takes a toll on the public.  “You can’t pick up a newspaper or watch TV or listen to the radio and not hear that the world is going to end,” Calliott says.


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