Bradley Alford, a money manager in Atlanta, just hit the panic button.
No, really. Mr. Alford just hit the key on his computer that initiates the Wall Street equivalent of the nuclear option: Sell everything.
He was acting on orders from two wealthy clients who became so alarmed by the troubled outlook that they simply wanted out. Over the last 10 days or so, they asked him to sell all of their stocks and invest in a mutual fund he oversees that is somewhat insulated against a potential market collapse.
“I have never, ever done it before,” says Mr. Alford, who is the chairman of Alpha Capital Management and has been managing money for 22 years. “This was unprecedented.”
This is the problem when a government loses the outward appearance (whether or not the reality is there) of competence. Investors are forced to make a decision about how much hurt they are willing to assume until order (whether appearance or reality) is restored. A lot of personal wealth was destroyed last week by what in effect was a Congressionally levied tax against the value of portfolios. I expect a lot more wealth to be destroyed today. I hope I’m wrong. This tax is of the most wasteful and cruel kind. It was completely avoidable. It will not pop a rivet in a single bridge or pave a yard of road or buy a bullet for our military. It is simply an up-in-smoke tax that we are paying for the mindlessness of Washington leadership.
#1, And of course the President is completely blameless in all of this.
Good point, No. 2, although I think one can make a theoretical argument on the Truman Theory that even when Congress puts the nation at risk, the President has some vague conceptual responsibility for not having enough leadership force to have made them act responsibly. But you’re quite right that this is virtually entirely a Congressional imposition of a wealth destruction tax. It was all avoidable.