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Two Days in the Stock Market

Any advisor can be a hero in an up market, but I’d rather be a hero when the markets were sinking.

By Jim Ruth

That Tuesday, like most other workdays, I was in my office by 7:30 a.m. This day was different, though. The market had taken a hellish plunge the day before. On my way in, I picked up the local newspaper, The Washington Post. I wanted to see how they covered the story in preparation for the inevitable onslaught of client phone calls.

Sure enough, the headline didn’t disappoint. SELLOFFS ROCK WALL STREET, WORLD MARKETS, screamed the top of the front page. The first sentence of the lead story described the carnage. “U.S. stock prices tumbled in unrelenting waves of selling today, prompting the New York Stock Exchange to halt trading twice…” The downward-sloping chart tracked the 500-point drop hour by hour. A photo of a floor trader at the NYSE showed him looking up at the “big board,” hand cupping the side of his face. It didn’t take a genius to read his thoughts. The 1987 market crash, you might be thinking? Actually, this was 10 years later—October 1997. I knew it was going to be a long day.

When I arrived at the office, newspaper in hand, I put on a pot of coffee. I figured I had about an hour before the phones would start to ring. I started to contemplate the questions I’d be asked, and my responses. I also reflected on my career. I entered the life insurance business in 1970 fresh out of college. But in 1980, I made a career change. I decided I wanted to take on a larger role in my clients’ financial lives and become a financial planner. I retained all my licenses and was no less a life insurance agent, but insurance was no longer my primary focus. I’d had to update my skills and credentials and notify my clients.

As time passed, I was pleasantly surprised that the transition was easier than I expected. I remembered advice the great agency builder Bill Wallace had given me: Find problems to solve, not people to sell.

So, as I read further into the story about the bloody trading losses, it’s not like I was second-guessing my career decision. I knew there would be days like this. At the same time, though, I would rather be spending my hours helping clients plan for their futures rather than on the phone defending my recommendations.

As my associates arrived, we talked about what happened yesterday and speculated what this day would bring. Surprisingly, people were positive and upbeat. About 9 a.m., as I would normally, I began working on a financial plan for an out-of-town client. I immersed myself in the project and before I knew it, it was 10:30 a.m. No calls had come in. Finally, at 11:45, my assistant said, “Bill is on the phone.”

“Oh, no,” I thought to myself. Bill, an engineer, would surely make me pay with some untold mental torture. To my great relief and surprise, Bill said, “Today is a great buying opportunity, right?”

I agreed and said something like, “Well, we knew it was going to happen but we just didn’t know when.” After some small talk, he placed a sizable mutual fund buy order.

Later that afternoon came the second and last of the market plunge calls. Shirley was a widow. “I assume everything is OK since I didn’t hear from you,” she said. I assured her it was. We discussed the relative safety built into a diversified investment program. The bonds we recommended and she owned gave her a softer landing; she just wanted reassurance.

As the market closed that afternoon, I started to feel pretty good about myself. But more importantly, I was extremely proud of my clients. In the 10 years since the market crash of 1987, I had grown a lot, but so had they.

Over the years, I have learned that I cannot predict what the stock market will do tomorrow any more than I can predict the weather or world events. But I can manage my clients’ expectations and their reactions to events. I had not promised them 20% to 30% rates of return, though several of my recommended mutual funds had achieved these unlikely numbers in recent years.

I had not promised a smooth ride, though the two previous years had seen explosive advances in the Dow. I counseled my clients that the market can move quickly and without warning in both directions, but the trend over time is usually up and to buy and hold quality funds and not to panic at the first sign of trouble like so many people did after the October 1987 crash. And I told them any advisor can be a hero in an up market, but I’d rather be a hero when the markets were sinking. I was gratified they were taking my advice.

The next day, the Post told a very different story on its front page. There was an upward-sloping mountain chart highlighting a 300-point recovery. The faces of the floor traders were jubilant. Some were clapping their hands while others made victorious high-fives.


Jim Ruth, CLU, ChFC, CFP, is a registered representative and president of Potomac Financial Group, a financial advisory practice in Gaithersburg, Md. He is a former Maryland state NAIFA president. He can be reached by phone at 301-948-3900 or by e-mail at


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