When brokers talk to clients or prospective clients, they are supposed to keep some sort of notes to the conversation. This is especially important for compliance purposes. It is necessary to have something that shows you “know the customer” to make sure you are making reasonable recommendations for them. Sometimes the content of these notes can be telling.
I started my career in 2002, just as the tech market was bottoming off the crash that started in 2000. One joke that was circulating regarded a note a broker wrote in 2000 when the market was near its high.
The note about the prospective client went something like this:
“This guy thinks the NASDAQ is going to 3,000. Ha ha ha.”
Remember that this note was taken during the tech boom. The NASDAQ peaked at 5,048.62 on March 10, 2000. A drop to 3,000 might have seemed unthinkable.
Then, on October 10, 2002 the NASDAQ closed at 1,114.11. By this time the note seemed pretty funny, at least to people who were able to have a sense of humor about the whole thing (I didn’t happen to be one of them).
It is important to never forget how volatile and unpredictable some investments can be. Stocks and other risky assets often defy expectations. They always move faster and more powerfully, both to the downside and the upside, than most investors and even experts realize.
Photo by Leyram Odacrem