Siegel, a financial analyst for an assortment of media outlets including WWL-TV and WWL Radio, and president of the New Orleans consulting firm The Siegel Group, has made it his mission to shepherd non-financially-savvy people and ultra-conservative investors into the stock market.
In his book Investing for Cowards: Proven Stock Market Strategies for Anyone Afraid of the Market, Siegel devotes a lot of time to the psychology of investing, pointing out that intimidation -- and lack of knowledge about the way the market operates -- is what keeps people on shaky financial ground.
"Real fear of the stock market encourages people to avoid it and keep their money in government-guaranteed investments, such as bonds and certificates of deposit," Siegel said last week in an interview from Barcelona, Spain, where he was touring on business. "Though the original investment, or principal, is guaranteed, the return is normally low.
"It's very difficult to become financially independent, staying ahead of inflation with only fixed-income investments," Siegel says. "So I would say that type of fear is unhealthy and irrational. It tends to come from a lack of understanding of the free markets and how they work."
There are two types of investment fear, Siegel contends: healthy and unhealthy. "A healthy fear would allow someone to take advantage of what the stock market has to offer without being taken advantage of, as it applies to investing."
In the book, Siegel outlines a theory he terms the "Chicken Stock" strategy, based on long-term growth and minimizing risks. "I consider five years to be long term," he says. "Keep in mind that the price of all stocks is random and unpredictable over the short term, but as the book points out, the long-term stock prices tend to stay in line with their earnings and dividends. The strategy shows how to take advantage of that relationship," he says.
After the Sept. 11 tragedies, panicked investors made the classic un-savvy move, Siegel says. "It's typical for the stock market to stumble in the face of uncertainty; it did so the first week of trading after the tragedy, and many average investors sold their stocks and mutual funds at the bottom. They will look back, as they always do, and regret the move."
Investors following the "Chicken Stock" strategy -- which buys stocks that aren't very affected by day-to-day market fluctuations -- used the faltering market to their advantage, Siegel says. "Many used the pullback as an opportunity to buy more at a discount price. The real pros of Wall Street are happy to buy the shares at 'fire sale' prices. The best times to buy have been during recessions and other difficult economic periods."
It's a mistake to try and "time" the stock market, Siegel emphasizes. "The stock market, with its collective intelligence, tends to anticipate better times ahead by six to nine months. So, those who decide to wait until better times arrive usually miss the big market moves. They also tend to sell when things look bad."
Siegel says he wrote his book after years of explaining financial markets to investment "cowards" in an approachable, non-intimidating way. He hopes it will continue his mission of easing scores of non-investors into the stock market, saying he's had personal satisfaction from watching his clients' assets grow.
"Many people are now financially independent because of moving some of their money from the government bond market and C.D.'s to the strategies I write about in the book," he says. "It is certainly not the only successful stock market strategy, but if one wants to be more comfortable with their investments in turbulent times, it should be the strategy of choice." -->
Fred Siegel appears at the New Orleans Investment Conference, a five-day event beginning Nov. 28. For more information call 837-3033. He also signs copies of his book Investing for Cowards: Proven Stock Strategies for Anyone Afraid of the Stock Market at 3:30 p.m. to 5 p.m. Saturday, Dec. 1, at Barnes and Noble Booksellers, 3721 Veterans Memorial Blvd. (455-4929).
Gambit Weekly is seeking nominations for its annual New Orleanian of the Year, a designation given to one local resident who has made outstanding contributions to the metro area this year. (Elected officials are not eligible.)
With all nominations, please include a brief biographical sketch and the reasons you believe this person deserves recognition. Mail nominations to Shala Carlson, Gambit Weekly, 3923 Bienville St., NOLA 70119. Entries also may be sent via fax (483-3116) or email (email@example.com). No phone calls, please. The deadline for nominations is Dec. 7; New Orleanian of the Year will be announced in our Jan. 1 issue.