SYRACUSE — Theodore (Ted) J. Sarenski, president and CEO of Blue Ocean Strategic Capital, LLC in Syracuse, says the 2007-2009 financial-market downturn, when stocks fell by more than 50 percent, caused substantial changes that still ring true today, including clients’ behavior. But other things, such as his firm’s approach to making investment decisions, have stayed […]
SYRACUSE — Theodore (Ted) J. Sarenski, president and CEO of Blue Ocean Strategic Capital, LLC in Syracuse, says the 2007-2009 financial-market downturn, when stocks fell by more than 50 percent, caused substantial changes that still ring true today, including clients’ behavior.
But other things, such as his firm’s approach to making investment decisions, have stayed the same.
Sarenski, a CPA and CFP, discussed this and other topics on the July 17 episode of the “Financial Fitness” program on WCNY-TV, with show host Vicki Brackens, owner of Brackens Financial Solutions Network and a chartered financial consultant.
Here are some of the highlights from that discussion.
What’s different now than in 2007-2009?: “Our clients have a much different expectation of what can happen, since they’ve been through this recently, then they had maybe prior to that. The 2000-2002 time period, when the market went down there, didn’t affect them as much as this 2007-2009 drop did,” Sarenski said.
“[Clients] thought, oh maybe things were overvalued in the 90s. But the 2007-2009 period was such a drastic drop for unknown reasons if you will — that people have this uncomfortable feeling. And yet, [they] have now realized we can’t expect 10 and 15 percent returns in markets consistently.”
What did you mean the market fell for unknown reasons that people didn’t understand? “It wasn’t about the fundamentals of companies. The companies were still making profits. People were still going to work,” Sarenski said. “Nothing appeared to be different, yet the market was falling, because our underlying investment system, our banking system, our system of loans … got disrupted. [It caused] a dry up of cash. It’s not something we saw on a day-to-day basis.”
What else is different this time? “People are actually looking into saving a little more than maybe they had in the past… Now there’s more of a concern of am I putting away enough money to have a retirement,” Sarenski said. Also, retirement is changing. “Maybe I thought I was going to retire when I’m 65, [clients say]. Then this happened, and I did lose money. Maybe now I’m not retiring until I’m 68 or 70. Then the concern is … am I going to be healthy enough to work until I’m 70,” Sarenski said.
What is still the same? “What’s the same, in terms of what we’re looking at, is we’re still analyzing companies and funds the way we did before,” Sarenski said. “It’s still are they making a profit, what’s their price to earnings ratio, how do markets affect [them]… Looking at the fundamentals of companies is the same as we did then.”
“Again, the market fell for reasons that had nothing to do with that. What we did then in terms of analyzing investments is what we’re doing today in analyzing investments,” he added.
What is the concept of the market “climbing the wall of worry” all about? Sarenski said investors have many concerns right now such as events in the Middle East, our economy pulling back in the first quarter, etc.
“The market is crawling on that worry to a higher level than it was at the beginning of the year. It’s that underlying worry that we have about all these things that could affect the market but yet haven’t affected the market… It’s that market rising despite the occurrence of “something that should really be bad news,” Sarenski said.
“And in times when people are not worried, that they think things are great, that’s the time to worry,” he noted.
To see the full discussion between Sarenski and Brackens, please visit http://video.wcny.org/video/2365291261/
Contact Rombel at arombel@cnybj.com