RENEE MONTAGNE, Host:
As the turmoil in Wall Street goes on and on, many people, not top bankers, are wondering how it's affecting them and what they should do. Hugh Johnson is getting lots of those kinds of calls these days. He's chief investment officer for Johnson Illington Advisers in Albany, New York. And he manages money for individuals as well as small institutions like churches, and schools, and unions. He's on the line with us now. Good morning.
HUGH JOHNSON: Good morning.
MONTAGNE: So I hear you've been getting more calls than usual?
JOHNSON: Oh, yes. The volume is very high right now. There's obviously a lot of very, very deep concern among obviously individual investors, and small to mid-sized churches, and endowments, as you know. And they are very emotional calls. They range from just sort of concern, and in some cases real fear. And so everybody is asking the question, you know, what's happening to my portfolio, and what should I be doing to my portfolio of stocks, bonds, and cash? And there's a lot of concern. It's a very emotional time.
MONTAGNE: And if that's the basic question, what are you telling people?
JOHNSON: Well, I try to sooth their nerves. First of all, if we're managing the money, and this is sort of self-serving, we already have reduced our exposure to stocks or sold some stocks at the end of last year. But they all obviously have other portfolios. And in that case, what I am telling them is that this really is obviously a very severe financial crisis, but like any downturn in stock prices or bear market that's accompanied by a recession, it's going to be followed by a bull market and a recovery in time.
And the long-term trend in stock prices, which has been up, will resume. So, that what they should do ordinarily is simply hold tight and sit tight. Now, many quite frankly have said, look, I can't sleep at night. This is too difficult for me. And if that's the case I've said, well, what you probably should do then is reduce your exposure to stocks some, and take that money when you sell some stocks and put it in to a money market mutual fund, particularly a money market mutual fund in investment Treasuries. Though I'm saying only some, not a lot.
MONTAGNE: Money market funds - a lot of us regular folk have those, but we often consider them safe as if it is cash, but is it that safe?
JOHNSON: Yeah. There is some concern, and there is some deep concern about money market mutual funds and their safety. And so that's why I say when if they do sell some stocks, if for example you have a balanced portfolio of stocks, bonds, and cash, and you sell - you are at 50 percent in stocks and you reduce that to 40 percent - then take the 10 percent that you sell and put it into a money market mutual fund, but only one that invests in Treasuries. And that's very safe. So, that's a way to reduce your exposure to stocks, and also a way to increase the so-called safety of your portfolio. And hopefully what that helps is it helps the individual sleep at night, which is ultimately the goal here.
MONTAGNE: Well, thanks very much for talking to us again, and we may be talking to you very likely once more.
JOHNSON: Great.
MONTAGNE: Hugh Johnson is chief investment officer for Johnson Illington Advisers, speaking to us this morning from Albany, New York. Transcript provided by NPR, Copyright NPR.