Published: September 16, 2008 07:33 am      

Locals urge looking beyond financial crisis

By Denise Richardson
Staff Writer

The financial crisis not only rekindles a need to review family budgets and holdings but also sparks opportunities to invest, local industry professionals said Monday.

``It’s not a crash _ it’s a bear market,’’ said Erna Morgan McReynolds, director of wealth management at the Morgan McReynolds Group at Citi Smith Barney in Oneonta. ``Markets go through this _ it’s always ugly. People get nervous.’’

After news Monday that Lehman Brothers investment bank filed Chapter 11 bankruptcy and Bank of America Corp. said it would buy Merrill Lynch & Co. Inc., the Dow Jones industrial average lost more than 500 points, or more than 4 percent.

Paul Hogan, research analyst and co-manager of FAM Equity Income Fund, said Lehman Brothers was on top of a short list of financial institutions in jeopardy and Monday’s development wasn’t unforeseen.

The challenge is to look beyond the crisis and recognize the investment opportunities, he said.

``Every bear market we’ve had, we’ve come out of,’’ said Hogan of the Cobleskill firm. ``The real question is what can we do today to be in position for the upturn.’’

The fund specializes in purchasing dividend-paying stocks for long-term holding, Hogan said, and the ongoing financial crises are additional times to speak with institutional and individual investors. McReynolds in an August letter told clients they would see volatile markets at least through the presidential election and that bad news on the housing market is likely through the middle of 2009.

``When the market looks ahead to our recovery from the recession (or slowdown, if you prefer), you will see stock prices go up,’’ McReynolds wrote. Investors who hold stock for the long term are rewarded, McReynolds said.

Douglas C. Gulotty, p r e s i d e n t and chief e x e c u t i v e officer of the Wilber Corp., owner of W i l b e r N a t i o n a l Bank, said the crises re-emphasize a need to review family budgeting. Employees of firms doing well would have a different approach to spending than recently hired state employees, he said.

Choices must be made between needed and discretionary spending, Gulotty said, and retirement funds shouldn’t be tapped to support current lifestyles. Wilber Bank is among the small, community banks that are well-capitalized and profitable, Gulotty said. Other sectors of the economy are doing well, he said, and investment opportunities are developing, but purchases should be judicious and have a tangible value.

The market should be allowed to correct itself, Gulotty said, and the Federal Reserve Bank should ``calm down’’ and not prompt an artificial correction through changing a key interest rate.

McReynolds said the financial market looks similar to that of 1990-91, when the United States had a war, a bear market, a recession, a savingsand- loan crisis and a real estate plummet. As markets anticipated recovery, there were big increases in stock prices, she wrote.

``We’ve been in business for a long time,’’ McReynolds said. ``We’re going to be here for a long time.’’