TEXT OF INTERVIEW
Scott Jagow: 401-K statements should be coming out pretty soon.
They are going to be ugly. U.S. stocks lost $2.1 trillion in the first half of the year.
Mr. Sloan, we’re all bleeding losses here. What should we be doing at the moment?
Allan Sloan: Well, if you’re someone like me — again, I’m closing in on 64, though I try not to worry about that — you just have to figure out what you’re doing, see if your approach still makes any sense. I’m personally, as I’ve said here before, somewhat dubious of the United States stock market and the dollar and what’s going on in this country, and I’ve been heavily invested by my standards in mutual funds that own non-U.S. stocks. But if you look at the numbers, it was not any great time to be invested in non-U.S. stocks either. The Dow Jones world, if you exclude the United States, is down 12 percent for the year.
Jagow: I would think right now there would be a lot of bargains in the market.
Sloan: Well, a lot of things are very, very cheap. The market itself is not especially cheap. The other thing is, and I’m very heavily in cash — you know, various money market funds — and money market funds are yielding less than 2 percent, you know, which is not any great bargain, let me tell you. Though it is, you know, it’s better to be up 1 percent for the year, you know, half of 2 [percent], than it is to be down 12 [percent]. But it’s not as if there’s anything there that’s a great place to be. The bond market, personally I wouldn’t touch, because I think interest rates are going up. And the stock market is the stock market. Generally speaking, when things have looked the worst for an asset class is the time to buy them. But I’m not telling you that.
Jagow: Well, you’ve been through a lot of these situations, Allan. What is your instinct here? Are we close to the bottom?
Sloan: I don’t think so. And I cannot tell you why. And there are very convincing arguments we’re close to the bottom. I’m very dubious of all of it, because we had this huge boom in housing, and we had a huge boom in all of these sort of screwball securities, and it was in many ways a bubble. And things go on on the upside a lot longer than you think they would. And then when they go bad then they tend to go down for much longer than you think they would. My bet is we’re not at the bottom, but I could be wrong, and I certainly hope I am.
Jagow: All right, Allan Sloan from Fortune Magazine. Thanks as always.
Sloan: You’re welcome, Scott.
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