With the stock market in turbulence and a baffling federal bailout package on the table, the newspaper asked two busy and prominent local investment firms serious questions about the situation.
Michael Gibson, an owner of Redwood Investments on Main Street, and Joshua Richardson, who runs one of the three Edward Jones offices in Fort Bragg, responded in different ways to the questions.
Richardson”s answer is at the end.
As Edward Jones is a private company and Redwood Investments is a local company tied to a major bank, neither firm is an investment bank, the type of firm at the heart of the present crisis.
Newspaper: How does the stock market turbulence affect Wachovia Bank and Redwood Investments? Should people be worried about their investments?
Gibson: Stock market turbulence has had a limited affect on Redwood Investments and Wachovia Securities. It does, however, have a profound impact on investor confidence. Solid asset management and planning have helped us guide our clients in the months leading up to and during this crisis.
Newspaper: How is your company the same or different than the companies that got into trouble on Wall Street?
Gibson: Redwood Investments is not an investment bank and has no exposure to failing mortgage securities. Our broker-dealer, Wachovia Securities, already has in place the retail banking-investment banking partnership the industry is currently being forced into, as demonstrated by the Merrill Lynch-Bank of America deal and the recent actions regarding Morgan Stanley and Goldman Sachs.
Newspaper: How will this entire debacle affect the community beyond your company?
Gibson: As of right now, the focus of this crisis is on the financial services industry. The swift action by the Treasury Department, Congress, and the Federal Reserve is designed to mitigate the damage to Main Street America. The anguish someone must feel in losing their home is unimaginable. However, an even broader economic crisis is at stake and can be avoided with appropriate action.
Newspaper: What is your opinion of the $700 billion bailout?
Gibson: The numbers are staggering and the burden seems heavy, but the risks of doing nothing at this time are even greater. What I hope not to see is taxpayer money used to finance golden parachutes for CEOs of failed companies while the average American is left to their own devices.
Newspaper: How are you different than the other investment options for locals?
Gibson: Redwood Investments is independently owned and operated by Fort Bragg residents. As a result we are free to offer clients advice based on what is best for them, rather than some brokerage firm in another state. The affiliation we have with Wachovia Securities provides many benefits to our clients such as FDIC-insured cash deposits and access to nationally recognized money managers. Our strength is our independence and investment in our community.
Richardson: I can”t comment on some of the questions because I don”t want to speculate on the unknowable.
What I would just reiterate to people is that we only have one client, the serious, long-term investor. We focus strictly on that. We don”t see anything in the current economic cycle that would dissuade us from our philosophy of buying quality investments, diversifying and holding them for the long-term. We go through economic cycles regularly and while each one is slightly different from the others, they are normal, inevitable, and temporary. We encourage investors to sit down with their financial adviser and review their goals and go over their concerns. Any time is a good time to make sure that your portfolio is still in tune with your long-term goals.
