Monday, August 27, 2007

Brokers Deal With SubPrime Woes

While you would never know it from the press and the significant drop in the markets, the country's retail stock brokers are taking the mess in stride.

The reality is, most retail investors' accounts should not be affected by the subprime problems directly. While an indirect investment, through a hedge fund or a derivative, might find its way into an investor's portfolio, most investors, or at least those with brokers, are not really exposed to the mess.

From Registered Rep magazine:

“If you’ve got a diversified portfolio of stocks and bonds and you don’t have too much debt on your house there isn’t much to worry about, yet,” says Greg Ghodsi, a Raymond James broker in Tampa, Florida. That isn’t to suggest Ghodsi hasn’t been busy lately, calling and emailing clients to reassure them he has a game plan as well as moving large sums of their money into safer waters. “In general we were 1 to 2 percent cash going into June, but we’ve been moving that to 10 to 20 percent since then,” he says. He’s also taking advantaged of depressed values to increase his clients’ fixed income positions.

At the same time, brokers report that clients are calling, and brokers are responding, with appropriate portfolio reviews and assurances of diversification.
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