For the last week or so Fidelity has been hitting my TV broadcoast area (northeast) hard with an ad designed to convince people to stay in the market for the long term. A very calming white-haired gent shows great historical earnings figures over the years in spite of ups and downs. Y2K is never mentioned.

I'm surprised by the timing. What exactly are they expecting the masses to react to that would justify the $ Fidelity is pouring into this ad? There has been so much market volatility during the last year or so, that a correction for internet stocks shouldn't be the reason. Lousy quarterly earnings reports or overseas problems could be anticipated, but the market has overcome those too.

This feels much bigger. It seems consistent with the possibility that Fidelity (representing the investment industry) expects a major bear market (for reasons featuring Y2K) and wants to delay borderline GIs from making any moves with their significant retirement funds. In other words, they think it really *will* be that bad.

Has anyone else seen the ads? Any reactions to it?

-- Brooks (brooksbie@hotmail.com), February 09, 1999

Answers

Haven't seen the add Brooks but Fidelity must see the beginnings of Folks bailing out. I wouldn't be surprised if Uncle Sam isn't footing part of the bill.

Ray

-- Ray (ray@totacc.com), February 09, 1999.

Brooks...

I saw the same ad on NBC last night and thought pretty much the same thing. Kinda strange to say the least...

-- (Dawnbringr@aol.com), February 09, 1999.

My old roommate works at Fidelity in DFW. They are having two tankers with enough diesel to run their generators for 6 months on site for Dec/Jan

-- Tod (muhgi@yahoo.com), February 09, 1999.

Saw it, too, during that Revolution Lite mini-series, "The '60's" -- hey, non-compliant date representation there! 8-}]

Thought to myself, "Peter Lynch says to us, 'The fundamentals are sound.' Everything must be OOOO-KAAAYY..."

Quoted in Ed's presentation materials:

But now, as throughout history, financial capacity and political perspicacity are inversely correlated. Long-run salvation by men of business has never been highly regarded if it means disturbance of orderly life and convenience in the present. So inaction will be advocated in the present even though it means deep trouble in the future. Here, at least equally with communism, lies the threat to capitalism. It is what causes men who know that things are going quite wrong to say that things are fundamentally sound.

-- John Kenneth Galbraith, "The Great Crash 1929"

Yo, Peter, can you say, "market bubble"? I knew you could.

-- Mac (sneak@lurk.com), February 09, 1999.

The Feds have "advised" bankers on what kind of spin to dish us.

"As we count down to the year 2000, one of the issues being reported in the media is whether the U.S. currency supply is adequate for the century rollover. Media speculation that cash reserves might be depleted can lead to reactions we would like to avoid - public concern and hoarding of cash.

As part of the industry's proactive stance on year 2000 issues, financial institutions can play an important role in reassuring customers that the nation's money supply is not in jeopardy. All financial institutions may want to consider a communications campaign that focuses on the safety and soundness of money deposited in banks, credit unions, and savings and loans. An important component of that message is that customer deposits are insured to the legal limit by the FDIC and NCUA and will be fully accessible during the transition."[boldface is my own]

Read this thread for more details:

Say it aint so Feds, you mean fractional reserve Banking that all the Gloom & Doomers have been talking about for years is a reality

-- Chris (catsy@pond.com), February 09, 1999.

Read J K Galbraith's "the great crash 1929" and you'll know the answers. It's all happened before.

Or, "If you're playing poker and don't know who the patsy is within a few hands, it's you". This also applies to the stockmarket!

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), February 09, 1999.

The radio ad that I heard had Mr. Lynch saying something like "Remember all those doom and gloom news stories back in 199X? Well, the next year the market rose 30-something percent! Shows you that you should ignore stuff like that and invest for the long term." To that pap I respond: "Remember in the summer of 1929 when there were all those 'it's different this time' stories in the media? Well, in the years that followed, the markets plunged and many were wiped out. Shows you that you should consider investing (not gambling) is a serious undertaking that requires constant vigilance and financial agility." Of course, when this whole charade is exposed and folks are wiped out yet again, Mr. Lynch won't be lynched. He and his ilk will be out of the country IMHO.

-- Jeremiah Jetson (laterthan@uthink.y2k), February 09, 1999.

It's Catch-22 for mutual funds, Fidelity a humongous example.

When I cash out of a mutual fund, the fund managers have to sell equity shares to produce the cash for me. When LOTS of people cash out, they have to sell LOTS of equity shares. When large blocks of stocks are offered for sale, the stock price is driven down. This degrades the mutual fund's performance. Fund managers don't like this.

Same thing happens when simply switching from equities to a cash fund, even in the same fund family.

-- Tom Carey (tomcarey@mindspring.com), February 09, 1999.

That ad campaign was started, as I recall, in late 1998 after the huge 1998 selloff crushed most stocks. Incidentally, contrary to popular opinion, the overall market has never reallh recovered from that selloff. We saw similar things in 1987 after the crash then too.

-- Drew Parkhill/CBN News (y2k@cbn.org), February 09, 1999.

Oops, sorry, I meant (obviously) "really"

-- Drew Parkhill/CBN News (y2k@cbn.org), February 09, 1999.

Is the game coming to an end? Drawing in last remaining old bachelors, the greater fools?

Latest Fidelity statement says:

"Effecttive September 30, 1998, the 3% front end sales load was removed from the following funds: Fidelity...,...,....,......

There goes my retirement!?

-- fly .:. in the ointment (.@...), February 09, 1999.