The document provides perspective on past market crashes and downturns in 1929, 1972, 1987, 1998, 1999, and 2007. It notes that while media hype can cause emotional market frenzies, taking a long term perspective is important. The document recommends buying blue chip stocks with consistent earnings, highly rated mutual funds, and insurance companies. It suggests selling high yield bonds and anything rated B+ or lower.

1. The Low-Down on What’s Up
with the Market
with Lisa Marie Brugman, RIA, CSFP, CEA
Owner, Vice President Client Services
AdvisorLisa@gmail.com
562-708-7370 cell

2. Are you this investor?

3. Flashback Headlines!
• “The Market is Heading for a Crash…”
• Published in Forbes, October 1, ????
• “Gambling at AIG!”
• Published in Forbes, October 24, ????

4. 1962

7. Let’s Get a Little Perspective.
• 1929 – Dow was up to 380 points
• Federal Reserve misjudgments caused the money
supply to fall by 1/3, combined with trade
protectionism of the Smoot-Hawley Tariff Act created
the largest stock market crash in US history.
• Market dropped 89% in 34 months leading to the
Depression with 25% unemployment.
• Multinational trade agreements and WWI
industrialization led the way to recovery.

8. • 1972 – Dow was at 1020 points
– Arab oil embargo caused crude oil prices to triple
to $12.60 per barrel.
– US wallowed for several years in a recession
economy until Paul Volcker was appointed Fed
Chairman in 1979.
– Volcker ended Stagflation (stagnant-inflation) by
tightening the money supply.

9. • 1987 – Dow is up to 2663 points
– Oct. 14th, US Treasury Secretary, James Baker,
announced at trade deficit of $1.1 billion, much
higher than expected by Wall Street.
– The following Monday, the Dow dropped 22.6%.
– Computer programs are blamed for the
exacerbated crash (investors could get to the
market to easily).
– Authorities put in “circuit breakers” to freeze
trading in a panic.

10. • June 1998 – Dow is up to 8952
– Hedge fund long-term capital management blew
up.
– Dow drops 6% in 1 day.
– Fed bails out several banks that would collapse
due to their involvement with LTCM.
– Dow bounces back within 6 months.

11. • 1999 – Dow is up to 11,497 points
– Dot-Com companies went public at ludicrous
valuation.
– Large losses at WebVan, Priceline, and other
DotCom’s ended the euphoria.
– 9/11/2001 aggravated the damage.
– Took 7 years to climb back up to Pre-DotCom
levels.

12. • 2007 – Dow is at 13,930
– Housing Bubble Burst
– Fed bails out Freddie Mac & Fannie Mae
– AIG Bailout
– “Free Standing” investment bank ceases to exist.
– Federalization or full take over of the majority of
lending institutions in the country.
– Largest Corporate bail out in history, being
negotiated by Congress.

13. Media “Negative” hype causes
emotional market frenzy!

14. 513

19. Consumer Spending!

20. Real Perspective

22. What to Buy?
• What to Buy?
– 1 out of 500 firms with a Moody’s rating of A or A- or worse will go out of
business.
– 1 out of 1,667 firms with a Moody’s rating of A+ or better will go out of
business.
– Mutually held insurance companies, such as
• New York Life,
• Mutual of Omaha
• MassMutual
• Guardian Life, etc. are the least likely to go bust.
– Mutual Funds to look at
• American Funds – AmCap Fund American Funds – Growth Fund of America
• American Funds – Investment Co. of Amer. American Funds – American Mutual
• Columbia Small-Cap Value Federated Kaufmann
• Fidelity Low-Priced stock Franklin Mutual
• Hartland Value Northern Small-Cap Value
• Stratton Small-Cap Value T-Rowe Price Small-Cap Value

23. • Blue Chips (large-cap stocks) – consistent earnings
– Becton Dickinson
– BorgWarner
– Chevron
– Factset Research Systems
– General Dynamics
– Illinois Tool Works
– Johnson & Johnson
– Johnson Controls
– Nike
– TJX

24. What to sell NOW!
–High Yield/ Junk Bonds
–Anything with a rating of B+ or lower

26. Says Warren Buffett,
the Oracle of Omaha

27. The Low-Down on What’s Up
with the Market
with Lisa Marie Brugman, RIA, CSFP, CEA
Owner, Vice President, Client Services
AdvisorLisa@gmail.com
562-708-7370 cell