When I was in college Prince used to sing “we are going to party like it´s 1999“. That´s what the markets are singing now. The problem is that 1999 was almost a decade ago. But the value of stocks now is the value of stocks in 1999. If you had kept a 1999 newspaper it would do now. The world however has grown around 40% since then. World GDP that is. So what are the markets saying? That we are going to shrink to the levels of 1999? I don´t think so.

I think we will have a bad recession, negative growth, a rise in unemployment. But I don´t think we are going back to 1999. That´s why I started buying stocks last week. And I am down 21% on around 20% of my portfolio, the rest is still in cash. What did I buy? Not C and BAC, I sold banks and those account for most of my loss now. I was shocked to see that Citigroup and Bank of America shares collapsed after the bailout. Banks may turn around but buying them is for government watchers. They are the epicenter of this hurricane and so subject to the whim of some ex GS employees that traditional business logic does not apply to them. Why did Lehman go under and Bear Stearns was helped? I think what Paulson is doing has no logic and I was wrong in thinking that I could understand him or the markets as they relate to government intervention. Instead last week I bought utilities, huge pharmaceutical companies like Merck or Lilly, and Dell, Microsoft, Apple, Nokia and some other very large tech stocks. And if this week they go down another 10%, I will buy more. My rule now is that for every 10% stocks go down I put another 10% of my portfolio in top stocks. And my objective is to keep those stocks for my 4 children. Looking back a month ago when I started buying some stocks of course I wish that I had resisted my instinct for hunting for bargains and waited. I would be 21% better off today. Still I am sure that we are now or in the next months in the buying opportunity of their generation. And then we can party, buying in 2008 at prices of 1999.

I just found an article in the New York Times that makes the same point I make but it´s much more elaborate and better.

Follow Martin Varsavsky on Twitter: twitter.com/martinvars

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kurab on October 12, 2008  · 

What are you talking about? You are already singing and dancing in 1999-style parties.

Look at this video with a lot of your friends….

3.0 rating

Martin Varsavsky on October 12, 2008  · 

@ kurab:

Interesting story! I had not seen it thanks

yani on October 12, 2008  · 


I share your view on investments – I am sorry to say this, but I really think that it’s a good time to invest. I have been observing and buying blue chips – of course no short term commitments.

since you talk about your kids and shares: if you don’t mind, would be good to hear your philosophy about bequeathing …

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Martin Varsavsky on October 12, 2008  · 

@ yani:

regarding my children since i have kids from 18 to 2 I have given some thought to this

i have told my kids that I will pay their education and give them an amount that could pay for an apartment and then they are on their own

and that i will live my inheritance to my foundation

nicolas on October 12, 2008  · 

“My rule now is that for every 10% stocks go down I put another 10% of my portfolio in top stocks.”

Nice rule of thumb but looking at the future, it doesn´t seem that your investment is going to be worth it. At the most, wall street will be up 20 % in a 5 years terms !

One idea would be to forget about wall street trades and invest in companies that support climate change; their ride seems fulfilling, on the point and lucrative.

Obama is going to have a tough time. 🙁

my 2 cents,


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JL on October 13, 2008  · 

Martin, if I may ask… when you buy individual stock, do you go through a broker or do you use an online service like etrade.com? What’s your recommendation? Thanks!

3.0 rating

Martin Varsavsky on October 13, 2008  · 

@ JL:

well right now i am not happy with my set up myself i am looking to change

JL on October 14, 2008  · 

I guess this makes for another post down the road… it would be interested to know what other readers are using… thanks!

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