Friday, October 17, 2008

Warren Buffett: Buy American. I Am.

 
October 17, 2008
Op-Ed Contributor

Buy American. I Am.

Omaha

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

Buffett Says Now Is the Time to Buy U.S. Equities


Buffett Says Now Is the Time to Buy U.S. Equities (Update1)

By Alan Purkiss

 

Oct. 17 (Bloomberg) -- Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities.

Writing in the New York Times, he said he's following the principle: be fearful when others are greedy, and greedy when others are fearful.

Exaggerated concern about the long-term prosperity of financially secure U.S. companies is foolish, and most will probably be setting profit records in years to come, Buffett said.

While short-term stock movements can't be foretold, the likelihood is that the market will recover before the economy or general investor sentiment do so, and ``if you wait for the robins, spring will be over,'' he said.

Referring to the 1930s Depression, Buffett pointed out that the Dow reached its nadir on July 8, 1932; economic conditions continued to deteriorate until Franklin Roosevelt became president in March 1933, and by that time the market had climbed 30 percent.

Bad news, Buffett concluded, is an investor's best friend, for it enables you to buy ``a slice of America's future at a marked-down price.''

Buffett, ranked the richest American by Forbes magazine, has committed at least $28 billion this year to acquire companies, finance buyouts and purchase securities for Berkshire as the contraction in global credit markets drove down stock prices and sent firms searching for funds.

Widely Imitated

Buffett built Nebraska-based Berkshire over four decades from a failing textile manufacturer into a $180 billion holding company by buying out-of-favor securities and businesses. Berkshire was the largest stockholder of Coca-Cola Co., Wells Fargo & Co., and Kraft Foods Inc. as of June 30, according to Bloomberg data.

Mutual funds and individuals mimic his stock picks in an effort to duplicate his success, and an academic study in 2007 found that using this strategy for 31 years would have delivered annualized returns of about 25 percent, double the gains of the S&P 500.

Berkshire advanced $3,650, or 3.2 percent, to $116,800 at 12:02 p.m. in New York Stock Exchange composite trading. The company has declined about 18 percent this year, beating the 35 percent drop of the Standard & Poor's 500 Index.

To contact the reporter on this story: Alan Purkiss in London at apurkiss@bloomberg.net

Last Updated: October 17, 2008 12:34 EDT

Thursday, October 16, 2008

CIT Reports Q3 Net Loss; Vendor Business 'Disappoints'

CIT Reports Q3 Net Loss; Vendor Business 'Disappoints'

http://www.monitordaily.com/app_enews/news.asp?news_ID=22226

CIT reported a third-quarter net loss from continuing operations of $301.6 million, or $1.13 per share, compared to income of $208.5 million for the comparable 2007 quarter. Finance revenue was $1.4 billion, down 12.6% from $1.6 billion in the third quarter last year.

Analysts had expected CIT would swing to a profit, with predictions on average earnings of $0.20 per share, according to opinion data surveyed by Thomson Financial.

CIT said the loss included a $455 million pre-tax non-cash write-down of goodwill and other intangible assets of the Vendor Finance business segment. The company's provision charge for credit losses in the third quarter was $210.3 million, up from $63.9 million in the same quarter last year. Year-to-date through September, CIT's provision charges were $606.2 million, up from $112.4 million for the same period last year. The reserve for credit losses as percentage of non-performing assets at the end of the third quarter was 80.6% compared to 123.7% at the end of the same period in 2007.

CIT noted in its news release that its Vendor Finance unit experienced a net loss for the quarter of $354.8 million, down from net income of $58.2 million in the third quarter 2007. Year-to-date, the vendor business swung to a net loss of $337.1 million from a $204.6 net profit for the same period last year.

Commenting on the vendor finance business, chairman and chief executive Jeffrey Peek said, "Vendor Finance returns were disappointing and we are undertaking a restructuring of that unit."

Thursday, October 16, 2008

Monday, October 13, 2008

New Master's Programs Will Train Sustainable Development Leaders

New Master’s Programs Will Train Sustainable Development Leaders
The first global initiative to provide rigorous professional training for future leaders in the field of sustainable development was unveiled Friday at Columbia University. The program, which was recommended in a newly released report by the International Commission on Education for Sustainable Development Practice, sets a new standard for other universities hoping to design their own Master’s degrees along this model. At the event, Jonathan Fanton announced that MacArthur is committing $15 million to seed the creation of such Master’s in Development Practice programs at up to 12 universities worldwide over the next three years. For more information read the press release, the Commission's report, and Jonathan Fanton's remarks.

Wednesday, October 8, 2008

FW: Microsoft supporting university program on gaming for teaching

FYI

________________________________

From: Shelley Stern Grach [mailto:sstern@microsoft.com]
Sent: Wed 10/8/2008 10:58 AM
To: Seegers, Lisa; Pressl, Lance; Huang, Jerry; Stasch, Julia; Molly Day; Richard Kurtz; Dan Morris; Mike Rocco; Fred Hoch; bwaas@illinois-cio.org; kgordon@uthatworks.org; Lisa Newman; Laura Thrall; Cheryle Jackson; hbhatt@cityofchicago.org; Mary Paulson; 'Michael.Krauss@mkt-strat.com'; Adam Hecktman; Jeri Johnson; Meredith Dowling; David Mosena
Subject: Microsoft supporting university program on gaming for teaching

Everyone

Wanted to make sure you saw this article on how Microsoft is supporting gaming as a teaching tool, in partnership with universities.

http://seattlepi.nwsource.com/business/382180_msftvideogame08.html

Young gamers play video games at a gaming event this summer in Santa Monica, Calif. On Tuesday, Microsoft said it would co-fund an initiative with several universities in order to find scientific evidence that supports the use of games as a learning tool.


Microsoft, universities work to prove that video games can be educational


By JOSEPH TARTAKOFF <mailto:joetartakoff@seattlepi.com>
P-I REPORTER

When John Nordlinger, senior research manager for Microsoft Research's gaming efforts, wanted a refresher on his French, he started playing "Everquest" -- the multiplayer online role-playing game -- in that language.

The strategy worked, Nordlinger said, but he added that researchers don't completely understand why.

"When people play games, there is some sort of state they get into," he said. "Nobody has really studied whether or not the brain is more receptive to learning complex concepts when you're in that state. People assume that is the case."

On Tuesday, Microsoft Corp. said it would co-fund an initiative with several universities in order to find scientific evidence that supports the use of games as a learning tool.

"Let's say you have a kid who is in school and he's in trouble and someone tries to convince you to (use) a game to teach algebra, and they ask for a study" to support the approach, Nordlinger asked. "This could be useful."

For Microsoft, the findings could potentially result in educational games designed for the company's Xbox game console, Nordlinger said.

Microsoft will invest $1.5 million over the course of three years in the initiative, which will initially focus on teaching fundamental concepts, such as fractions, in a middle school setting via games. A consortium of universities, led by New York University, will put in another $1.5 million.

"Many students become discouraged or uninterested and pour their time at home into gaming. Ironically, we think gaming is our starting point to draw them into math, science and technology-based programs," said Ken Perlin, a professor of computing science at NYU, who will co-direct the effort.

The first phase of the project will focus on trying to determine what "about games is both fun and transfers ideas," Nordlinger said.

Another phase of the project will involve developing educational games that draw on those findings.

Under the program, prototypes of the games will be introduced into 19 New York City-area schools. Nordlinger said that although the games will be developed for the Xbox, partner universities also were welcome to collaborate with other console makers.

He said it was not clear that Microsoft, which in the past has funded efforts to teach computer science with games, would produce game titles based on the new research.

But, he said, he imagined that a parent would be more enthusiastic about buying a child a "first-person shooter game" for the Xbox, if he or she knew it was "going to improve their SAT scores."

P-I reporter Joseph Tartakoff can be reached at 206-448-8221 or joetartakoff@seattlepi.com. Read his Microsoft blog at blog.seattlepi.com/microsoft.

Shelley Stern

Central Region Citizenship Lead
Microsoft Corporation 77 W. Wacker Drive Chicago, IL 60601
office (312) 781-8177 mobile (312) 927-2754

Enabling people and businesses throughout the world to realize their full potential.

Monday, October 6, 2008

PETA's letter to Ben Cohen and Jerry Greenfield

September 23, 2008

Ben Cohen and Jerry Greenfield, Cofounders

Ben & Jerry's Homemade Inc.

Dear Mr. Cohen and Mr. Greenfield,

On behalf of PETA and our more than 2 million members and supporters, I'd like to bring your attention to an innovative new idea from Switzerland that would bring a unique twist to Ben and Jerry's.

Storchen restaurant is set to unveil a menu that includes soups, stews, and sauces made with at least 75 percent breast milk procured from human donors who are paid in exchange for their milk. If Ben and Jerry's replaced the cow's milk in its ice cream with breast milk, your customers-and cows-would reap the benefits.

Using cow's milk for your ice cream is a hazard to your customer's health. Dairy products have been linked to juvenile diabetes, allergies, constipation, obesity, and prostate and ovarian cancer. The late Dr. Benjamin Spock, America's leading authority on child care, spoke out against feeding cow's milk to children, saying it may play a role in anemia, allergies, and juvenile diabetes and in the long term, will set kids up for obesity and heart disease-America's number one cause of death.

Animals will also benefit from the switch to breast milk. Like all mammals, cows only produce milk during and after pregnancy, so to be able to constantly milk them, cows are forcefully impregnated every nine months. After several years of living in filthy conditions and being forced to produce 10 times more milk than they would naturally, their exhausted bodies are turned into hamburgers or ground up for soup.

And of course, the veal industry could not survive without the dairy industry. Because male calves can't produce milk, dairy farmers take them from their mothers immediately after birth and sell them to veal farms, where they endure 14 to17 weeks of torment chained inside a crate so small that they can't even turn around.

The breast is best! Won't you give cows and their babies a break and our health a boost by switching from cow's milk to breast milk in Ben and Jerry's ice cream? Thank you for your consideration.

Sincerely,

Tracy Reiman

Executive Vice President
 

MacArthur Fellows 2008 - "Genius Grants"

BofA still has largest number of online customers

comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today announced the results of an analysis of the impact the Chase/WaMu and Wells Fargo/Wachovia or Citi/Wachovia mergers will have on the online banking market.  Bank of America will likely continue to have the largest number of online customers compared to merged Chase/WaMu or proposed Wells Fargo/Wachovia or Citi/Wachovia across both liquid deposit account customers as well as online customers of any kind, even though the bank mergers will result in a large percentage of new additive customers.

The press release below is also available at: http://www.comscore.com/press/release.asp?press=2497 

Thursday, October 2, 2008

WSJ: Entrepreneurs Scramble for Financing

Subject: WSJ: Entrepreneurs Scramble for Financing

http://online.wsj.com/article/SB122290315280796157.html?mod=todays_us_nonsub_marketplace#printMode

* FINANCING
* OCTOBER 2, 2008

Entrepreneurs Scramble for Financing
By KELLY K. SPORS and RAYMUND FLANDEZ

Small businesses are turning to angel investors, suppliers and
personal credit cards as the financial crisis spreads to Main Street
and access to commercial bank loans becomes more restricted.

After being rejected last month at two commercial banks, Education 4
Kids Inc. owner J.M. Ivler is back to financing his 5-year-old online
retailer with personal credit cards. "I can't get the banks to give me
a loan," complains Mr. Ivler, whose Las Vegas company is profitable
and produced $350,000 in sales last year.

Brian Moran, president of magazine publisher Moran Media Group LLC,
decided to sell $125,000 in accounts receivables and incur a 3%,
30-day rate on outstanding balances to finance his Paramus, N.J.
company after a bank credit line wasn't renewed. The bank told him it
was cutting back on small business lending to minimize risk.

It is unclear how many commercial banks aren't writing new small
business loans. But reports from across the U.S. suggest that small
businesses are chasing alternative financing more vigorously than a
few weeks ago.

What money is available can carry high interest rates. Harold Bradley,
chief investment officer for the Ewing Marion Kauffman Foundation, an
entrepreneurial-research organization, says small businesses with
variable-rate loans are "shell-shocked" by the jumping rates on those
loans.

Shelly Karras, president of Fordham Financial Services Inc., an
alternative financing company in Northbrook, Ill., says he now
receives six to seven inquiries a day from banks trying to help
customers line up alternative financing, up from just a handful a
month last summer.

Mr. Moran had to dip into cash reserves to pay off an $80,000 balance
when his local bank declined to renew a $350,000 credit line. Another
regional bank turned him down for a $200,000 credit line, citing his
personal credit score and the fact that his company didn't have enough
assets to secure the line.

Some businesses, meanwhile, are finding sympathetic suppliers will
help get them over the financing hump. Jorge Marinez and his two
partners went this route after getting turned down by seven banks over
eight months.
[Angel-investor] Getty Images

"No one wanted to qualify us for a business loan," says the
39-year-old Mr. Marinez, who with partners sought a $250,000 loan to
open a steak and seafood restaurant in Burr Ridge, Ill. "They kind of
complained to us that the way the economy is going right now, the
banks don't want to take a risk in the restaurant business."

Mr. Marinez approached the property's landlord, who agreed to finance
the endeavor last month. The landlord was also getting hit hard by the
economy and wasn't finding any other renters for the site, Mr. Marinez
says.

He hopes to open the restaurant, called Porterhouse, in late November.

Write to Kelly K. Spors at kelly.spors@wsj.com and Raymund Flandez at
raymund.flandez@wsj.com

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

Wednesday, October 1, 2008

Harvard MBA students to consult with Living Cities

http://livingcities.org/2006%20Files/newsletter/September/2008_newsletter_Harvard_MBA_Students.html

Beginning in October, Living Cities will count on the consulting horsepower of a team of five MBA students from the Harvard School of Business. The team will deliver up to 450 hours of consulting on Living Cities' sourcing, uses, and deployment of capital.

Led by Professor Peter Tufano, Sylvan C. Coleman Professor of Financial Management and Senior Associate Dean for Planning and University Affairs, the team of five will identify the needs and opportunities in market-rate and below-market rate segments of the social investment sector. They will also show where and how Living Cities can play a useful role in that landscape.

The students bring diverse backgrounds and skill sets in general business, finance, and community development:

  • Aleem Remtula: Worked with Living Cities as 2008 summer associate; experienced in social investing.
  • Zach Morello: formerly of Deloitte Consulting
  • Kellie Hata: Experienced in distressed debt hedge funds
  • Laura Marquez: Completing joint program with the Kennedy School; Capitol Hill experience
  • Elana Berkowitz: Completing joint program with the Kennedy School; Capitol Hill experience
    Weekly progress meetings will culminate with a presentation slated for December, 2008.
 

WSJ: Loyalty Pays a Bitter Dividend

 

Loyalty Pays a Bitter Dividend

Grace Pace, a 72-year-old widow, says her husband invested years ago in a local bank in Biloxi, Miss. Over time, that tiny bank was acquired and re-acquired, until it became part of giant Wachovia Corp. Still, Mrs. Pace and her husband, a Biloxi physician, held on: It was a point of family pride to have a stake in the local bank.

[Grace Pace]

Grace Pace

On Monday, the day Wachovia was broken up in a forced sale to Citigroup, Mrs. Pace was in tears. Wachovia's dividend once provided a third of her income. That money is now gone. "You just think, 'This can't be happening,'" she said. "What is secure any more?"

Mrs. Pace said her son recently reassured her that if things get really bad, she can move out of her home and into his basement, which has a window. Then she began to cry again.

Variations of Mrs. Pace's story are playing out in households nationwide. The financial crisis is overwhelming some of America's most loyal investors: individuals who've held on to bank stocks for years or even generations.

After World War II, as the American middle class embraced stock investing, hometown banks were often a first choice. The honor of bank ownership became a part of small-town mythology, expressed in movies like "It's a Wonderful Life," the holiday-season fixture about a beloved local banker and his guardian angel.

In the decades after the Great Depression and the bank failures of the 1930s, financial stocks rebuilt their prestige and earned investor confidence as the industry became a major part of the nation's blossoming service economy. Banks now employ 2.2 million people -- more people, and at higher wages, than McDonald's Corp. (whose restaurants employ 1.6 million world-wide).

Families often hesitated to part with bank shares that spouses, parents or grandparents had accumulated, even as the nature of the original institutions changed almost beyond recognition. By June 2007, ordinary individuals and small institutional investors owned roughly $750 billion in the stock of financial institutions, according to Thomson Reuters.

By the end of June 2008, however, individuals' holdings in financial stocks had fallen by $380 billion -- more than half their value. Values have fallen further since then, of course.

[Two women enter a branch of Wachovia bank in New York. Wachovia was taken over by Citigroup in a deal brokered by the FDIC.] EPA/Justin Lane

Two women enter a branch of Wachovia bank in New York. Wachovia was taken over by Citigroup in a deal brokered by the FDIC.

In the first half of this year, bank-stock dividends fell by $35 billion, or 53%, according to the Federal Deposit Insurance Corp. Roughly a quarter of that stock was held by small investors, according to Thomson Reuters, meaning they lost $8.8 billion in dividends in six months. Retirees are often particularly reliant on dividends for income.

The faith of long-term holders is now being punished. Joe Thompson, whose grandfather helped found a bank in Winamac, Ind., that later became part of KeyCorp, describes the stock, which his family still owns, as "the family heirloom." Today, it is in a trust he manages for his 89-year-old mother. But the share price has fallen 70% since early 2007, and the dividend has been halved.

Similarly, Sidney Berry, a retired obstetrician in Tennessee whose father invested in the hometown Lebanon Bank back in the 1950s, has lost tens of thousands of dollars. Still, he can't bring himself to sell.

"I think about my father buying stock in the Lebanon Bank 50 years ago, and owning the stock all that time," said Dr. Berry, 63. "I do have something of a sentimental attachment to it."

Of course, one of capitalism's bedrock rules is that when a company struggles or fails, its owners -- the shareholders -- bear the heaviest losses. Still, from the perspective of some of these conservative, long-term investors, the burden has fallen unfairly on the little guy.

Some, including Dr. Berry, question how trusted community bulwarks were allowed to become speculative enterprises that behaved more like Internet stocks, and wonder why no one is being held responsible. He points a finger at the often highly paid executives who ran the failed firms. "It seems like they soak the shareholders and take off with a lot of money," Dr. Berry said. "I don't know why boards let CEOs do that kind of thing."

Until recently, financial stocks seemed like a good bet. After the 2001 recession, financial-company profits rose to account for more than 2.5% of gross domestic product from less than 1% in the 1980s. Financial stocks replaced tech stocks as the market's largest single group, in terms of market value. (Although now, due to the financial crisis, they've swapped positions again.)

Few investors realized the danger that accompanied banking's heady growth. Once-stodgy institutions were dabbling in exotic new securities based on high-risk mortgages, leaving them exposed when the housing bubble collapsed.

Mrs. Pace, who took a hit from Wachovia's breakup, was married to a Mississippi doctor who strongly believed in local banks. "He had a very emotional tie to the bank stocks," Mrs. Pace recalled. "He felt they were perfectly safe."

[shrinking investments]

He bought shares in a local Biloxi institution called First Jefferson. First Jefferson was bought in 1994 by SouthTrust Corp. of Alabama, which in turn was bought by North Carolina's Wachovia in 2004.

Mrs. Pace sold some shares after her husband's 2003 death. But by 2006, nearly half her stock holdings were in banks, mainly Wachovia.

Her investment adviser and others urged her to diversify more. While she was nervous owning so much of one stock, she points out that her income is primarily Social Security and dividends -- and Wachovia "was the best dividend producer that I owned," she said.

Wachovia closed Tuesday at $3.50, down 94% from a recent high in February last year.

She moved to Hendersonville, N.C., into what was once the family's vacation home. Previously, she lived in a condo nearby, but now is trying to sell it to restore her nest egg.

"This was how we were going to fund our retirement," Mrs. Pace said, "We were going to have real estate, and we were going to have stocks." Now both are in trouble.

A Part of Life

For Dr. Berry of Columbia, Tenn., owning bank shares was a part of life, starting with his father's investment in Lebanon Bank more than a half-century ago. In 1987, First Tennessee National Corp., a Memphis bank with big plans, acquired little Lebanon Bank for $31 million in stock. First Tennessee (which in 2004 changed its name to First Horizon National Corp.) expanded into more than 40 states, selling mortgages and home-equity loans into the booming housing market.

Last year, Dr. Berry faced a tough decision. With the stock near its highs, his sister, Letitia Hudlow, who also inherited stock from their parents, decided to sell it and diversify her portfolio, and she urged her brother to do the same.

Dr. Berry says he just couldn't sell their father's stock. He told his sister, "I think I am just going to hang on to it and see what happens," Dr. Berry recalls. "What happened was, it went down to about 20% of its value very quickly, and stopped paying dividends."

[bank investors take a hit]

A Nashville television station broadcasts local stock prices during the evening news, and Dr. Berry watched First Horizon's shrivel. He and his wife would discuss what to do.

"The halfway point was an attention-getter," he said. At $22 a share, which it hit late last year, the stock had fallen about 50% from its 2007 high of $45.13. "I didn't want to sell low, so I didn't -- but it went way below that."

On Tuesday, First Horizon finished at $9.36 a share, down 79% from that 2007 high.

With mortgage markets in crisis and defaults mounting, First Horizon has sold its mortgage business outside Tennessee, announced plans to replace its chief executive and, in a June letter to shareholders, said it would pay its third-quarter dividend in stock rather than in cash.

"I fear that they are just diluting the value of the stock itself, so that the stockholders aren't really getting anything of value" from the dividend, Dr. Berry said. Until the bank ran into trouble, it had been paying a dividend of about 5%.

First Horizon acknowledges that its stock dividend doesn't have financial value, since it is akin to a stock split, but says some shareholders find the additional shares useful.

It defends its business strategy. "Our national expansion served us well for a certain period of time through the 1990s and part of the 2000s," said David Miller, senior vice president for investor relations and corporate strategy. More recently, however, "The strategy had to change, so we have changed it very aggressively."

Dr. Berry says he has other income and that his lifestyle hasn't been affected by the loss of the dividend. But he occasionally finds himself wondering whether he might have to resume his medical practice if he faces a further financial setback.

"I can see how a retired person whose retirement is dependent on one particular stock -- how a reversal like this could make them consider going back to work," he said.

Bank stocks have been among the hardest-hit of the financial shares. The Dow Jones Wilshire index of U.S. bank stocks was down as much as 60% in July from its record high. On it was down. Some banks, such as National City, have been down more than 90% at their lows. Another, Washington Mutual, has been subsumed into J.P. Morgan Chase & Co.

Delayed Retirement

Some people are being forced to delay retirement. Joan Makowski, a 27-year Merrill Lynch employee who was widowed late last year, hoped to ease into retirement by working part time next year. Her retirement savings included a big holding of Merrill stock. With that stock down 74%, her savings are down $150,000 and she has abandoned hopes of retiring soon. "I now worry for the first time in my life about money," she said.

As a financial manager, she knew she shouldn't keep such a big holding of one stock. But as a Merrill employee, she never imagined her employer could suffer so badly.

"I was so proud to work for Merrill Lynch. I thought I would never have anything to worry about," she said. "I am just glad I didn't work for Bear Stearns." In March, Bear Stearns Cos. was absorbed into J.P. Morgan, making Bear Stearns one of the first major Wall Street firms to succumb to the financial crisis.

Merrill has agreed to be taken over by Bank of America at a higher price than Bear Stearns shareholders received.

Mr. Thompson, whose grandfather helped found the bank in Winamac, Ind., recalled that his father wouldn't consider selling the inherited stock. His dad felt an obligation to his family, and to the town, Mr. Thompson said.

After his father died in 2006, Mr. Thompson and his mother diversified by selling half the shares. They kept the other half, which by then were in KeyCorp.

This year, Mr. Thompson, who heads two small Florida biotechnology companies, had to tell his mother that KeyCorp had taken a hit. "I said, 'You know, these bank stocks are not doing very well,'" Mr. Thompson says. But he assured his mother that that their financial adviser was able to rearrange the trust's holdings so her income wouldn't change.

"She said, 'Are we going to sit tight?'" Mr. Thompson recalls. "And I said, 'Yes, we'll sit tight.'"

As they spoke, he says, he realized that many of the residents of her retirement home were also discussing the bank-stock debacle. "A lot of them were affected by it," Mr. Thompson said.

—Shelly Banjo contributed to this report.

Write to E.S. Browning at jim.browning@wsj.com

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved