Sam Jones: "I realized it was a generational buying opportunity"

Q. As the financial crisis unfolded, at what point did you have the kind of clarity that helped you develop a strategy? A. For me the “aha” moment came closer to the end of the crisis cycle and into "09, when it became a massive high-volume washout of investors. For years, I have studied the megacycles, and each one has had a dramatic flush to the right side of the middle of the cycle. It's all obvious now, but in March 2009, it dawned on me that we just flushed to a new 12-year low. I realized it was a generational buying opportunity. If you were lucky enough to be an investor and have any capital left, this was the time. That was my pitch to clients in October of that year at our annual meeting. But at that time it was still a hard sell. I could tell the pitch was falling on deaf ears. If I had to describe the facial expressions of my clients it would be something like, “You're so full of shit. The world is ending; the markets are falling apart.” I think the proof needed to be shown to people in the form of their account balances. They wouldn't believe the recovery was real until they were made whole. It wasn't until early 2010 that most of our more conservative risk-managed portfolio models made new highs. For the more aggressive strategies, it took until late 2011 until they poked out to a new high. I ended up losing about 20% of my clients after the crisis hit. In 10 years of business, we had not experienced a single down year, so when I handed our clients a 16% decline, they thought we were broken. At that point, I was definitely questioning our value proposition, because it shook my tree to see that many people walk out the door. It's always going to be a scar on our performance because nobody wants to ever put up a double-digit negative number — even if it is compared with a 40% market drop.” Sam Jones  President  All Season Financial Advisors Inc.  Denver  — as told to Jeff Benjamin NEXT CRISIS COMMENTARY - Robert J. Glovsky: "Clients became increasingly nervous and wanted action"