WASHINGTON — Alan Greenspan’s investment portfolio shows that in years when the stock market is in a funk, safety can beat exuberance, whether rational or not.
The chairman of the Federal Reserve, who sent stock markets around the world plunging in 1996 when he expressed concerns about “irrational exuberance,” avoided the huge losses inflicted on many stock investors last year.
Greenspan’s portfolio, almost totally invested in safe Treasury securities, may have actually posted a sizable gain, based on his financial disclosure form, which was released Tuesday by the Fed.
The disclosure form requires only a listing of assets in ranges of worth, not the actual value.
Greenspan’s assets begin in the less than $1,000 category and top out with one asset valued at between $1 million and $5 million.
If Greenspan’s assets are valued at the maximum level, they totaled $9.6 million at the end of 2000, up from a maximum of $7 million at the end of 1999.
Even at the low end of the valuations on the disclosure form, Greenspan’s statement showed that he managed to pretty much hold his own, with investments valued at $3.1 million at the end of the year, compared with a low-end valuation of $3.4 million in 1999.
By contrast, the technology-heavy Nasdaq composite index plunged by a record 39.3 percent last year while the Dow Jones industrial average fell 6.2 percent, the first loss for the Dow in a decade.
Greenspan’s investments are concentrated in Treasury securities, considered the world’s safest investment since the U.S. government has never failed to pay investors who hold its bills, notes and bonds.
These holdings allow Greenspan to avoid conflicts of interest which could arise because some companies fared better than others on the basis of his interest-rate decisions.
Greenspan, in a December 1996 speech, posed the question of when investors could know that they were in the grip of “irrational exuberance” that was causing them to bid up stock prices to unjustified levels.
Although markets around the world initially plunged on the comments, investors quickly shrugged off Greenspan’s worries and pushed stock prices ever higher until early last year when the technology bubble burst as the Fed pushed interest rates higher to cool off the overheated economy.
While Greenspan does not own stocks, his wife, NBC reporter Andrea Mitchell, does, according to the disclosure form, which requires a listing of a spouse’s assets.
Mitchell owns stock in General Electric Corp., the parent company of NBC, Estee Lauder, Clorox, H.J. Heinz, Kimberly Clark, McDonalds Corp. and Rubbermaid among others. Her biggest single holding, listed in the category of $250,001 to $500,000, was in Abbott Laboratories.
The disclosure form also shows that Mitchell earned $72,500 for giving five speeches last year to groups ranging from Sweet Briar College and the Towson University Alumni to the Jewish Community Center of Richmond.