Ready for the Storm
By Isabelle Gan
As a financial analyst starting out in the early 1970s, Chris Bertelsen learned a hard lesson that would shape his professional career.
"There I was, a 29-year-old guy. The markets were up. Everybody was happy and I thought it was going to be pretty easy," says Bertelsen, now a managing partner at Global Financial Private Capital in Sarasota.
Then along came 1973-1974, one of the worst stock market crashes in American history where the average stock lost half its value.
"That was a heavy dose of humility," says Bertelsen, at the time a financial analyst at State Street Bank in Boston. "I was worried about my job."
Bertelsen, like thousands of others, watched the excruciatingly steady decline of the market. To make matters worse, like most others, he had banked on the trendy stocks of the day, such as Polaroid and IBM, which bore the brunt of the crash.
"It was like slow torture," he says. "It was an erosion that seemed to be unmerciful in its persistence. I went from a cocky young man to being humbled."
At the end of the 694-day crisis, still with a job, he emerged with a different outlook.
"From that time on, it was the conservation and preservation of capital that became important, as opposed to how much money you can make," he says.
Eventually, Bertelsen advanced as a financial adviser and later as a portfolio manager, managing high-profile funds such as the United Arab Emirates Investment Authority, State of Washington, United Auto Workers and Rockefeller Foundation funds, with an aggregate worth of as much as $800 million.
When the market went down in 2000, Bertelsen's conservative approach paid off. During the difficult period between 2000 and 2004, he racked an average annual return of 6.2% when the market was down an average of 2.3%.
Over the last decade, 62-year-old Bertelsen has gained a reputation as one of America's top managers, with an impressive track record.
In 2001, Barron's named him one of the top 100 fund managers in the U.S. He has appeared as on Wall Street financial shows, including CNBC's power lunch and CNN. And more recently, in March, he appeared on Bloomberg TV. He'll soon appear again on CNBC.
"People are interested in hearing about a different philosophy in managing their money," he says.
Overall, his strategy is to stay away from trendy, volatile stocks such as those in the technology and pharmaceutical sectors, opting instead for the more staid and true, energy, tobacco and utilities stocks.
More importantly, in contrast to the buy and hold mentality, Bertelsen's approach focuses on buying stock with maximum dividends.
"Everybody thinks in terms of how much a stock has gone up," he says. "What people constantly forget is that dividends account for over 41% of what you make."
At Global Financial, a firm that specializes in managing assets for investors with a net worth of $10 million or more, Bertelsen emphasizes the strategy of a short commitment time for holding a stock. For example, instead of capturing the dividend from one 3% yielding stock for a year and earning 3% a year, the company captures the dividend from three 3% yielding stocks getting 9% in annual income.
Generally, Bertelsen looks for companies that show strong balance sheets and cash flow.
Growing up in Dedham, Mass., Bertelsen always had a fascination with history and the stock market, a combination that would go hand in hand. His mother was a school teacher, his father, a career man with Bethlehem Steel Co., worked 47 years in the ship repair business.
Bertelsen went on to earn a bachelor's degree in history and a graduate degree in finance from Boston University.
As a financial analyst, he quickly learned that an old adage applied in the financial world.
"History constantly repeats itself," he says. "Every time you see a disaster, no exception, it's a great time to buy. When the Russian economy went bankrupt in 1988, people who had the courage to buy made a lot of money. The same thing went for Argentina, when its economy collapsed in 2001. "
Bertelsen also credits some of his financial wisdom to learning from the best.
Well-known American investors he's worked with include Dean LeBaron of Batterymarch Financial Management, David Dreman of Dreman Value Advisors and Peter Lynch of Fidelity Investments.
He jumped at the chance to move to Florida in 1992 when he was given the opportunity to start Eagle Asset Management Value Equity in St. Petersburg, a subsidiary of Raymond James Financial Inc. He and his family had always been attracted to the area, vacationing in the Gulf Coast since 1967. Eventually he and his wife settled in Longboat Key.
In the Bertelsen household, market talk is common dinner conversation. "Whenever there's a get-together, it's always talking about the market and business which makes for great family bonding," he says.
His wife, Rosemary, holds a degree in economics. And both children have followed in his footsteps, moving to Sarasota to work in the financial industry. His son, Edward, is chief investment officer and relationship director for Global Financial. His daughter, Elizabeth, is a financial adviser for Legg Mason Wood Walker Inc.
As for his outlook for the market, Bertelsen still believes events will keep repeating themselves.
"I think the road map for the future will look like the 1970s and it will frustrate both bulls and bears," he says. "I think all the finer things going for us as a country and as an economy are reversed. Tailwinds will become headwinds."
The growing trade deficit and the rise in interest and energy rates are among some of the bad omens. Terrorism in an increasingly globalized economy will make for an unstable market, he says.
There's no fazing the veteran Bertelsen, however.
"Given the combination of our conservative approach and experience we should be able to weather the ups and downs of the market," he says. "As far as I'm concerned...I say bring on the storm, because we've got the right concepts at the right time."