Posted on: Sunday, March 30, 2003
Wall Street now hiring military consultants
By Adam Shell
USA Today
NEW YORK — In search of a trading edge, Wall Street is going straight to the U.S. Military Academy to gain insights on how the war with Iraq will likely unfold.
With stock prices increasingly driven minute-by-minute by battlefield events, Wall Street's intelligence machine has shifted its tactics from analyzing financial data to scrutinizing battle plans with the help of generals and colonels. Although the information isn't classified, it's a useful guidepost in war-proofing portfolios.
"Investors are looking for perspective," says Duncan Richardson, portfolio manager at Eaton Vance. "It's no different than seeking expert opinions from doctors to gauge the potential success of a new drug."
Examples of Wall Street's reliance on battle-tested soldiers:
• Charles Schwab has added retired Air Force Gen. David Baker to its team of market gurus. The decorated Gulf War fighter pilot shares his war insights daily in audio sound bites lasting three to six minutes that are webcast on Schwab's Internet site.
In recent briefings, Baker warned of "tough days ahead," while stressing patience.
"Desert Storm took six weeks and Kosovo two months to win," he says. "Putting a time line on the war is the wrong approach."
• On March 7, less than two weeks before war broke out, Prudential Securities invited 30 institutional clients on a field trip to West Point. The goal: help them gain a better perspective on how the conflict with Iraq, ongoing terror threats and other geo-political flashpoints would affect stocks.
In his presentation, retired Gen. Barry McCaffrey did not gloss over potential perils, including North Korea and challenges facing the United States after the Iraq war ends.
"He said things I had to sanitize in my (research) piece," says Chuck Gabriel, senior Washington strategist for Prudential.
Terrorism experts Col. Russ Howard and Capt. Reid Sawyer followed with a sobering assessment of the United States' endless battle to thwart attacks.
"We're trying to give our clients an edge by taking them directly to the source," Gabriel says. "They're getting an undiluted dialogue rather than filtered information and TV sound bites."
• Before the war, strategists at UBS Global Asset Management met with Gen. Charles Vyvyan, former head of the British defense staff in the United States.
From that meeting, which was arranged by one of its larger clients, UBS gave its analysts possible war scenarios and potential investment implications.
Money managers who are members of the U.S. Army Reserve also are providing input.
