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An Appetite for Sound Bites

As I was watching the election returns, it struck me how quickly things come into and go out of fashion. It's as true with investment fads as it is with political fortunes, as our dear departed Speaker can attest. With Bimbrolgio in its final death throes, a new media obsession has suddenly emerged. Yes, it's stable value and it's hot, hot, hot. After years of being ignored or dismissed by the experts as irrelevant, this is a dramatic turn of events. You can hardly pick up a newspaper or turn on the television without seeing high praise lavished on a balanced investment strategy, with stable value often being mentioned in the context of DC plans.

Needless to say, this newfound respectability is a welcome change and it isn't just a media creation. Anecdotal evidence abounds indicating that cash flow into stable value options has increased as defined contribution investors have also rediscovered the benefits of stable value. And I have certainly noticed that plan sponsors are taking more of an interest in their stable value funds. Some plans that no longer have a stable value option are even adding them back. It's enough to make one hearken back to the glory days, when stable value was the most popular option and no one questioned it's role in the plan. But I digress.

In reality, memories are short and 20% corrections are few and far between. The stable value boomlet we are experiencing was born in the August market turmoil and will die soon after it passes. We are at the mercy of the equity market, which the average investor now embraces, and this complacency is interrupted less and less frequently. Discussion of a rational, balanced approach to investing will be drowned out in the next wave of market euphoria. So we might as well enjoy this brief outbreak of sanity while it lasts.

But other than muddle our way to oblivion in this "new era" economy, what else can we do? We can pray for a return to the good old days of the 70's and 80's when stable value thrived on instability, uncertainty and fear brought on by big deficits, volatile interest rates and equity markets. We've suffered through the 90's as steady, responsible fiscal and monetary policy has brought more stability to the financial markets, and who needs stable value in times like these? It's always possible that things could change again, but I wouldn't bet our livelihood on it.

One thing that is clear from observing successful political or public relations campaigns is the importance of a simple, well-packaged message and the ability to "stay on message". Substance is almost secondary. Remember "Morning in America," "Where's the Beef", "Contract with America" and "Bridge to the 21st Century?" This year it was "Enough is Enough, Kenneth." In an age of ever-shorter attention spans, even the worthiest cause gets buried if not well packaged.

Stable value needs such a simple message and the discipline to reinforce that message in palatable "sound bites" at every opportunity - press, interviews, letters to the editor. Here's my first crack at such a message.

Retirement Savers:

• A balanced investment strategy is the best approach, and
• Stable value is crucial to achieving good balance.

Not exactly poetic. I'm sure someone can do better. Send your ideas along to Gina. A lifetime subscription to Stable Times goes to the winner. "Just do it."

Read Next: An Introduction & Making Stable Value Part of the Retirement Solution