Found in the Globe & Mail:http://www.theglobeandmail.com/servlet/story/RTGAM.20070817.wpanhandle0818/CommentStory/National/home
g h from Canada writes: This scary, dishevelled panhandler approaches me today and says he needs money. I point out the location of a local shelter where he can stay warm and get a decent meal, but he seems even more agitated. ‘What’s the problem?’ I say. ‘I don’t want a meal, I want money’ he says. ‘Why?’ I respond. ‘Well’ he says, ‘You’ve seen what’s happened to equity stocks the last 48 hours haven’t you?? My broker has me heavy into U.S. equities and I’m taking a real bath.’ So I told him to just ride it out. If he’s into sound companies then he’ll be okay. This seems to bother him. He tells me ‘Look the 5-year bull market is over. The U.S. returns that investors enjoyed in recent years have been largely fuelled by a mssive reduction in the float of public shares, thanks largely to private equity deals and stock buybacks by public companies.’ I say ‘Yes you’re right of course, but rates are rising and lenders are demanding tighter terms.’ ‘Exactly!’ he replies, ‘Which is why the US$1.55 billion bond sale meant to help finance Kohlberg Kravis Robert’s buyout of Royal Ahold’s U.S. Foodservice Inc. was scuttled last month.’ Well we went back and forth for a good 20 minutes, until he won me over by pointing out how the proposed IRS code change in the U.S. would serioulsy eat into private equity and hedge fund activity, and smart investors will just sock away cash and wait for the right time to buy long-term bonds. I took his advice and gave him $50,000 to cover any margin calls from his broker. And here I was hoping he just wanted to squeegee my window for a buck.