Newspaper article THE JOURNAL RECORD

Seeing through the Mask to Our Fundamental Strengths

Newspaper article THE JOURNAL RECORD

Seeing through the Mask to Our Fundamental Strengths

Article excerpt

In spite of a dramatic confluence of negative forces in the economy -- a 28-month bear market that is the longest seen since the 1970s, accounting and corporate scandals, and the repercussions of terrorism -- investors have not abandoned the markets, according to Alan Rappaport, president of The Private Bank at Bank of America.

But they are re-evaluating their investing strategies and shifting to lower-risk investments, he said.

Rappaport, who operates in New York, said recent headlines about business scandals and economic problems "mask" the "fundamentally strong foundation" of the United States.

"The economic engines that have driven the country since the Second World War remain intact," he said. "Our investment in processes and products and technology have driven up individual productivity."

From his perch at Private Bank, which serves high-income clients dealing with wealth management issues, Rappaport believes several trends in the investing world and the general economy have become apparent.

First, most investors have realized that the economy remains fundamentally sound and aren't heading for the lifeboats.

"They have not bailed out of the market," Rappaport said. "They haven't panicked. They haven't thrown in the towel."

But clients have instead shifted their investment balances toward less risky securities and are reviewing their investment strategies.

"The prospect of having stocks go down is something we didn't think about in the `90s," Rappaport said. "Today, risk is reality and not a theory."

Rappaport said many Private Bank clients now believe the worst of the bear market is finished, in spite of the extraordinary length of the bear market.

"During the course of the last three months there has been increasing belief that we are reaching, coming closer to a market bottom," he said. "That doesn't mean that in the short term that there's going to be any easy way out, but that we remain confident and upbeat that in 2003 we'll continue to have economic growth and the prospects for positive equity returns. …

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