PSU Magazine Spring 1988

A Contrary Point of View Richard Huson's way of managing money By Dana Holmes T h e day the stock market col– lapsed last October, investment advisor Richard S. Huson ('67) barely took his eyes off the screen of his quote machine - a computerized version of ticker tape - except to answer telephone calls from shocked clients. "Everyone was too stunned to jump out of a window," he says. "People were calling with everything from soft whimpers to gallows humor. The underlying emotion was fear, coming out as disbelief, amazement, sorrow and humor." Huson waited out Black Monday, then watched as the stock market came to a virtual halt midday Tuesday and shot up again Tuesday afternoon. "As a money manager you can't avoid the passion of the moment," he says, "but you step back and put it into a framework. We got hit bad, but not as bad as others." Huson, 48, shares a spacious office on the 29th floor of the Pacwest Cen– ter, with partnerJim Crabbe. They founded The Crabbe-Huson Company in 1980, and today manage $300 mil– lion in funds for corporate and indi– vidual investors. From their window they can look across to One Financial Center, where they'll soon move to accommodate the rapid growth in their money manage– ment firm. Operations at their second office, located in Bend, will also be moved there. Huson will continue to live and work in Bend, making the weekly commute to Portland. Looking back, Huson says that October was a disturbing month, but he concedes that he's still optimistic, given the overall success of his con– servative approach to money and his "contrarian" philosophy of investing. A contrarian, h e explains, does just the opposite of what the crowd is doing. When the price of stock is on its way down and most stockholders are sel– ling, it's the signal for the contrarian to buy. "Most investors look at assets going up in price and assume they're more attractive, and going down, less attrac– tive." He points out that the price of stocks may change, but the fundamen– tal value of a company doesn't. "We try to buy stock in companies being over– looked or punished by the market unduly." The companies Huson gravitates toward are usually highly recogniza– ble, larger companies with proven staying power. "Generally it's really not exciting to invest in them -they're big old ugly dogs - but if you buy them right and sell them right you'll get a very respectable return. The goal is not to make a killing in any one stock, but to pick up a gain of 30 to 50 percent in 12 to 18 months." Evidently his strategy works. In six of its eight years, Crabbe-Huson has outperformed the stock market in its stock selections, and since its incep– tion, the company has had an average annual gain of 21 percent in its stock portfolios and a 19 percent gain in its balanced funds. A balanced fund is a combination of stocks, bonds, and short-term reserves. "It's a diversified, lower-risk PSU MAGAZINE PAGE 10 Money manager Richard Huson, '67, weathered October's stormy stock market at his Portlandl &nd firm. profile," Huson says, "but it protects you from the October l 9ths of the world. You don't make as much when things are going up, but it's comforting when things go down." The SEI Corporation, which moni– tors the performance of 1,300 institu– tional funds, placed Crabbe-Huson in the top quarter of money management companies for its long-term record on both balanced funds and stock portfolios. That standing meant that Crabbe– H uson was in a solid position when the stock market crashed, and averted serious losses. "We had approximately 30 percent of our money in cash, so we were protected and still ended up with a 13 percent return," Huson says. "We did in fact do some buying on the day of the crash, but it was hard to make transactions because ofjammed machines." One favorable outcome of Black Monday, Huson observes, was that people began spending less money and saving more. He believes individ-