Her stock continues to rise. Former Morgan Stanley executive and equity trader Alexis Glick is now vice president of business news on Fox Business channel and anchor of "Money for Breakfast." She has been a member of the New York Stock Exchange since 2002. She made some bold predictions in January that proved to be accurate. She predicted the dollar would strengthen and it did, and oil would go lower and it did. Before Fox, she worked at NBC and CNBC covering business and politics. She lives in New York City with her husband and three children.
Q: Why was Bernard Madoff able to defraud so many without getting caught?
A: It's actually remarkable, isn't it? It does call into question whether or not we (individually) have held ourselves accountable enough for making sure that we do the due diligence when we make investments. On the other hand, here is someone who was one of the godfathers of the industry in electronic trading, like a celebrity. This guy is the king of what he does. It is astounding when you think about it.
Q: So, basically it would take skepticism at every turn to prevent something like this because he had a sterling reputation.
A: What the Securities Exchange Commission will say is that when someone is a registered investment adviser that they only usually make an inspection of somebody's books once every three years. What I hate about this situation is that he was running two businesses -- a broker dealer, which is the responsibility of the SEC to review. Apparently, they reviewed it and found some issues over the past couple of years. Then there was this investment arm, but he didn't become a registered investment adviser until about a 1 1/2 years ago! How is that humanly possible?
Q: What do you think it will take to stop corporate crime?
A: What we have right now is a complete lack of confidence. I imagine President-elect Obama is going to make transparency one of the hugest parts of his [administration]. We need to know when rating agencies are rating debt instruments, like asset-backed securities or mortgage-backed securities. How they do that is going to be the $64,000 question. It's going to be a mess. Somewhere along the way we missed valuing properly what assets are worth. That has to be one of the top priorities in 2009 as far as I'm concerned.
Q: With the biggest budget deficit in the history of the United States, how can we afford bailouts and stimulus packages? Is it better to feel the pain?
A: Listen, you raise the most important point, and that is how do you take yourself out of a moment like this when we are in a recession and we are also living in unprecedented times because we have experienced one of the greatest financial crisis in American history. Some believe the way out is to spend your way out of a recession. There are plenty of fiscal conservatives who say if you spend your way out of it who will pay in the long run? Well, our children will pay for that in the long run. So the issue here is will we spend our way out of it? Yes, because we already started it. Will we rescue things we never should have? Will we lose money on some of those investments? Absolutely. We, the American taxpayer, now own the insurance business, the banking business and now the car manufacturing business, and we own the government agencies that backstop almost 50 percent of the mortgages in this country.
Q: Some predict an S&P at 500. Anything is possible now.
A: I think you hit the nail on the head -- anything is possible. Here's the thing: I am always the glass-is-half-full kind of person. I believe there will be parts of this economy that will begin to recover in 2009. There are also going to be parts of the economy, and the country, that will just be beginning to experience the worst of the pain. History suggests that the market corrects at least six months before you get out of a recession.
Q: What are you doing about your investments?
A: I worked on Wall Street for the vast majority of my career. I have a lot of good friends there and I know this stuff pretty well, but I'll tell you something, I'm not investing in the market. Yeah, do I have my 401(k) in the market and my pension, yes. Have I made vast changes to it? No. Obviously I have a longer time until retirement. In this environment I'm not thinking if there is a great opportunity for me to buy a stock at one of the lowest valuations possible. I'm actually thinking, I've got a mortgage and I want to pay it down and refinance my mortgage. I'm worried that maybe I, like many Americans, accepted one too many credit cards. I am going to tighten my belt and pay down my debt.
Q: So would you say that is a good strategy for most Americans in the new year?
A: We are in the kind of environment where cash is king. If you have cash right now you are going to experience some of the greatest opportunities in the world. No. 1, some of the cheapest stock valuations we have seen in a very long time. No. 2, some of the real estate values in some markets are down 50 percent. There are going to be tremendous refinancing opportunities. I would say wipe out credit-card debt. Refinance your mortgage. If you go to a triple A corporate bond that's yielding 10 percent, as opposed to a zero percent on a treasury bond, in most cases that corporate bond is secure and it seems like a pretty sound investment. In some of the big banks you can get a six-month CD at 4 percent. If you are two years away from retirement, you've got to think about how cautious you need to be in this environment, because another shoe could drop.
Q: As a born and raised New Yorker, how do you feel about Caroline Kennedy, senator?
A: It's interesting, yeah, born and raised New York City kid. There is just something about the Kennedy family that makes me feel good. The question for Caroline Kennedy is going to be, is lack of experience in public office going to be offset by what she could bring to the table?
Q: Would you describe yourself as competitive, and is it a trait to have working on Wall Street?
A: Yes [I am competitive]. I am a former athlete. There is that competitive spirit of wanting to win. My dad used to always remind me when I went to work, because I was an institutional equity trader (one of the people who invests for the big mutual and hedge funds), he would say, "Remember, Ali, you are investing the money for your grandmother. It's about the individual, not these big large institutions." Wall Street has to be trustworthy.
Q: So, Ali, what happened to your mom's pension plan at Lehman Brothers?
A: You are so funny. Well, the pension benefit guarantee is protected by the government, so she was fine, thank God. My mom and dad are a couple of years away from retirement, and they have lost a lot of their retirement fund. It will change how long they work. I have family members whose homes are on the cusp of foreclosure. Every single person in the country is affected by this.
Patricia Sheridan can be reached at firstname.lastname@example.org or 412-263-2613.