Confidence Shaken

I am working hard on getting through a crisis of confidence. I am the enternal optimist, always thinking that things will be better tomorrow. This year has been a real test. I have been dealing with the worst market since the great depression while battling lung cancer.

The market collapse has hurt all of my clients. I saw something like this coming and I said so last April at a client dinner. I said that the real estate bust could lead to financial chaos, as it did in Japan in 1989. In the back of my mind, I thought the US and Japan were too different and the financial debacle that befell Japan would not happen here. Nevertheless, I should have raised more cash. I simply lacked the confidence of my convictions. I have been about 15 - 20% in cash through all of this. In retrospect I wish I were 50% cash.

Following the collapse of banking we are now facing the collapse of the auto industry, which was once the economic backbone of the country. Yesterday we learned about a Wall Street firm's $50 billion rip off of investors. Bernie Madoff was the former Chairman of NASDAQ! What is the world coming to? It feels like everything is falling apart!

Every piece of advice I have given people has not worked out as I had hoped. Until now, in my career I have followed the conventional wisdom of Wall Street. I have preached diversification, not timing the market, and investing for the long hall. But I have begun to question this wisdom. I am now focusing on just a few stocks that are industry leaders and positioned to do well over the next 3 - 5 years. Companies like McDonalds, Exxon Mobile, Johnson and Johnson, 3M, Boeing, Wells Fargo, etc. I am positioning clients so that, in the future we need to raise cash, I can do it easily.

One thing I have noticed is that there are a lot of brokers who are successful and have NO concern about doing the right thing for their clients. They put themselves first -- called YTB (yield to broker). Their only concern is how to line their pockets. I see it every day. People like me who are less concerned about money and more concerned about doing the right thing and taking care of people do not benefit from being honest and having integrity. Unfortunately, it appears to me that the public can not tell the difference between me and a greedy broker. That hurts.

The last piece of bad news that has shaken my confidence is Kevin Mahoney, my manager at Morgan Stanley who was diagnosed with pancreatic cancer last year, but who was doing well until recently. Turns out that the cancer is back and they are going to try to remove the tumor. Kevin had beaten the odds, so this is a real set back. It makes me wonder...have I beaten the odds, or is more bad news yet to come.