MSRPlans BlogAugust, 12, 2011
An impassioned salesman often uses the word “guarantee”, but when selling stock or private equity, this word is blacklisted. Brokers used to take greater liberties in making predictions - saying they guarantee a stock is going to soar. But this was already history when I was on Wall Street in the late 1990s as an investor relations (IR) account executive and hedge fund manager.
Back then I was taught, “The only thing that is guaranteed is US Treasuries.” On August 6, 2011, the United States lost its AAA rating by Standard & Poor’s (S&P). Even though S&P dropped the rank by the smallest increment possible, and the two other ratings agencies kept US debt at the highest ranking, the markets gyrated wildly in the following days.
Where does this leave the meaning and applicability of guarantee? There are plenty of countries on S&P’s list that retain AAA status: Austria, Australia, Germany, Sweden, Singapore and Guernsey, which is in the Channel Islands. However, I don’t think today’s IR reps are going to be taught to only use the word guarantee when talking about the debt of Guernsey.