Old-fashioned greed is making a comeback.
Financial advisers, who say that a growing number of formerly wary clients are becoming dangerously aggressive, worry about clients making more ill-timed bets.
Several factors appear to be at play with this new-found greed.
For one thing, missing the run-up in the market has created feelings of regret among investors. Compounding that feeling is the fact that clients are getting almost no return on cash holdings, advisers say.
“It's like a light switch just went on,” Kathy Klein, portfolio manager at Marietta Investment Partners LLC, said about the change in investor mood.
Some clients “are irate about ¬having 10% to 15% cash in their accounts, even though the last conversation we had was about having [minimal] risk” in the portfolio, she said.
These clients have “an aggressive desire to recoup losses,” said Ms. Klein, whose firm manages $350 million in assets.
“People are now trying to earn back what they've lost,” agreed Derek Holman, managing director at Enright Premier Wealth Advisors Inc., which manages $750 million.
“They're not worrying about the risk — they're [looking at] how to make money as opposed to protecting it,” he said.
Investors are feeling a “slight euphoria,” said Thomas McGuirk, principal at Martin Thomas Wealth Management LLC, which manages $100 million.
They “definitely feel the world [economy] is looking more positive and want to get back in [the stock market] as soon as possible,” he said.
Not only do investors want to make up lost ground, but a 4% dividend available with some stocks looks much more attractive than sitting in cash, Mr. McGuirk added.
But these newly bullish investors could, once again, be dead wrong in their timing.
For the full version of this story, please see the upcoming Sept. 28 issue of InvestmentNews
