SEC Chairman: Investors Should Trust 'Basic Strength' of U.S. Economy

This is a rush transcript from "Your World With Neil Cavuto," September 15, 2008. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: All right, the SEC today trying to calm fears of a lot of Americans that, even though Lehman is filing for bankruptcy, your cash, stocks are safe.

Reaction now from SEC Chairman Christopher Cox. He's been a very busy fellow these last few days, weeks, I guess.

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Secretary, very good to have you. Thank you.

CHRISTOPHER COX, CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION: Happy to join you.

CAVUTO: Let me ask you, for those who own stock, they're protected in all cases?

COX: Well, obviously, securities, stocks, bonds can go up and down. They fluctuate. And, so, they're long-term investments for most people.

Today, with the enormous movement in the market, is a good example of the hazard of day-trading. For most people, playing around in the stock market, trying to pick it, move in minute-by-minute, hour-by-hour, day-by-day is a very, very bad plan.

Instead, thinking of investment as something that takes place over a long period of time, you know, saving for life goals, saving for your retirement, saving for your children's education, saving for emergency medical expenses, and so on, is the right way to deal with securities investing.

And to that extent, I think people can feel comfortable, because, over time, the markets have gone up in this country. They're built on the strength, the basic strength, of the American economy.

(CROSSTALK)

CAVUTO: Well — well, by the way, this is illustrated in a chart we show since, actually, dating back to the '29 stock market crash. Now, that's looking at it from way back, stepping back, but those little gyrations in between seem extremely painful.

What is your message to investors listening to you right now, Mr. Chairman, and saying, "I just want — I want out; I want out of the stock market; I don't want to be near the stock market; I don't want to do anything with it"?

COX: Well, it's not the place of the Securities and Exchange Commission, or the chairman, to give investment advice. But I — but I can observe that most people, if you take a look, for example, at the market crash of 1987 — which I remember, because I was working in the Reagan White House at the time — most people who see an event like that and then sell find out that, if they had just stayed put, they might have been just as well-off. Trying to...

CAVUTO: But if you had been in the market after 9/11...

COX: ... trying to time it just right...

CAVUTO: ... you would have a delay, a substantial delay. You would still be waiting, right?

COX: Well, that's right.

Trying to time the market is tough. So, I would advise people to, first of all, get advice, if they're not expert in these things themselves and if they have significant money at stake.

Second, I would give a special message to those 83,000 customers of Lehman Brothers, retail customers, who might have had their money there. The filing of bankruptcy by the Lehman parent is not going to affect — that Chapter 11 proceeding is not going to involve the Lehman broker dealer subsidiary.

CAVUTO: OK. All right.

COX: It's going to be resolved outside of bankruptcy. And those people should find that their cash and their securities are all protected.

CAVUTO: Mr. Chairman, thank you.

COX: Happy to be with you.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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