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Fortune 500 not so fortunate this year
Allan Sloan is a senior editor-at-large at Fortune
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TEXT OF INTERVIEW
Steve Chiotakis: ExxonMobil overtook Wal-Mart for the top spot on the Fortune 500. The magazine released its big list yesterday. It hasn't been a banner year with earnings dropping 85 percent. As a matter of fact, Fortune says it's the worst year ever for the list, and that dates back more than five decades.
Fortune's Allan Sloan joins us now to talk about the revenue plunge. Allan, what's the most interesting number you see in there?
Allan Sloan: $4.1 trillion.
Chiotakis: Why is that so interesting?
Sloan: Well, it's interesting to me 'cause that's how much the stocks in the 500 were selling for this year as opposed to what they sold for a year ago. So you're down $4.1 trillion, which even these days is a lot of money.
Chiotakis: So how did we go, Allan, then, to seeing the stock market as this safe haven to, "My God, I'm not touching that."
Sloan: Well, this has to do with -- you'll forgive me -- age, Steve, but there was a huge bull market from the summer of 1982 through the spring of 2000, and stocks were turned 20 percent a year. This idea got in the land that it was really easy to save for your own retirement by just buying an index fund or send your kids to private college because the stock market would provide. And for seven years after that market ended, that fantasy was still there, but now I think it's gone.
Chiotakis: So here we are out of fantasy land Allan. What have we learned, then, from the crash?
Sloan: Well I'll tell you what I've learned, and I hope other people have learned it as well, which is that you cannot trust the stock market to take care of you. You have to take care of you. In two years, the stock market -- again, as measured by the Fortune 500 -- was down 43 percent. I mean, these are stunning numbers, and they ought to tell you that nothing goes up forever and that you cannot trust your fate to the stock market, because as the old story: you may love your stocks, but your stocks don't love you.
Chiotakis: But nothing will stay down forever either, Allan, right?
Sloan: That's true. But given how many people are -- you'll forgive me again -- my age, who had saved all of their lives, were getting ready to retire -- which is not the case with me, 'cause I'll never retire, 'cause my wife will shoot me if I do. But all these boomers who are close to 65 or 66, suddenly they're a lot less wealthy than they thought they were. And heaven help us all, they're going to rely on Social Security.
Chiotakis: Fortune Magazine's Allan Sloan. Allan, thank you.
Sloan: My pleasure, Steve.
About the author
Steve Chiotakis was the host of Marketplace Morning Report until January 2012.
I found this morning's comments by Allan Sloan a bit irritating. If I got Mr. Sloan's message correctly, it was "Don't expect the stock market to take care of you, you have to take care of yourself." What is Mr. Sloan's advice for a retiree or someone about to retire? (I am a bit younger and not in that unenviable situation). Most have been following the advice of the majority of investment advisors and putting their savings into a balance of stocks, bonds, real estate and cash. The stock portion of that has eroded significantly over the past 8 months. Did Mr. Sloan suggest that they not put a portion into the stock market or issue a "sell" suggestion when the Dow hit 14,000? Should those saving for retirement now avoid stocks completely? And how can a retiree "take care of him/herself", other than by decreasing expenditures? Today's comments seemed pointless, other than to rub salt into some fresh wounds.
Paying off your mortgage before retirement is a reasonably safe investment. It saves you the 5% or so in interest which beats the hell out of getting paid <1%. Getting a 30 year mortgage paid off in 15 would be sweet. It also helps to avoid the nighmare scenario of going into invoumtary early retirment (AKA laid off and can't find a job at 58) and being upside down on a a mortgage. The boomers that "invested" in an oversized and overvalued house in 2004 are your best source for advice on what not to do. Of course this is a low risk low reward stategy that many comissioned stock brokers and insurance sales folks will tell you is quite stupid. Cash equity in a house? Only your grandparents (or great-grandparents) think like that. Don
Mr. Sloan says we should not count on the stock market to "take care of you", to build our retirement. What is he advocating? How do you invest so you have a very good chance to have adequate retirement funds? I have heard these comments made numerous times since the financial world has disintegrated, but I have yet to hear answers/ideas of what we can do with any confidence of success.
