Nothing against Wall Street, New York City, or investment bankers, but the pain is mostly theirs, and better them than us. Really, how many people at Lehman Brothers and Merrill Lynch do you know? Maybe there will be a disastrous ripple effect soon enough, but this is not like a hurricane or a Great Depression. In keeping with the contrarian mind-set of this column, here are some encouraging views:
The windshield appraisal. One good way to assess property is to tear yourself away from your television, computer, or newspaper and go look at it. Memphis has come a long way. Ten years ago, there was blight at Union and Third where there is AutoZone Park, Toyota Plaza, and the downtown elementary school, a parking lot where there is FedExForum, and a railroad yard where there is South End.
The best untold story in Memphis is the vanishing inner-city housing projects and their replacement with new housing that looks as sharp as anything in the suburbs. The difference between Lamar Terrace and University Place on the west side of Interstate 240 or between College Park and LeMoyne Gardens or between Hurt Village and Uptown is astonishing. "It makes a statement when you come across the bridge from Arkansas or up from Mississippi," says Housing and Community Development director Robert Lipscomb. "People used to think Memphis was horrible."
Realism and the housing market. Linda Sowell has been selling houses in Memphis for 30 years. "Interest rates came down today to 5 and three-quarters percent," she said this week. "There was a time when I would jump over a car for that. I was doing this when interest rates were 18 percent, and I couldn't even look people in the eye when I quoted a rate to them. It was embarrassing to tell them what the notes were."
Sowell sees things slowly improving, but meanwhile, vintage Memphis is on sale. Two Sowell listings on South Belvedere near Peabody, one of the priciest and most beautiful streets in Midtown, are under $1 million.
"People are nervous, but sellers are being more realistic," she said. "The thing that's hurting us most is people coming here from out of town can't sell their homes."
Their loss is our gain. FedEx hub employees are handling 1.5 million shipments a night, and FedEx is expanding into the old National Guard facility. "When volume isn't growing much, we bring as much volume as we can through Memphis to minimize costs," says John Dunavant, vice president in charge of the Memphis hub.
Intelligent long-term investors. Memphians Mason Hawkins and Staley Cates were winners of Morningstar's Fund Manager of the Year Award in 2006, the industry equivalent of the Oscar or Pulitzer. In the semiannual report to shareholders in the Longleaf Partners mutual funds in August, this is what they wrote:
"We do not know how long economic uncertainty and shareholder fear will last. Bear markets do not die of old age. The mispricing, however, is providing the opportunity to own high-quality companies with terrific five-year outlooks." And this: "There is plenty of panic in the air. Historically, the best time to invest has been when owning stocks has felt the worst."
Corporate survivors. Banks with a big presence in Memphis have been especially volatile. Whether you have made or lost a lot of money depends partly on when you got in. The "Memphis Skyline Portfolio" of First Horizon, SunTrust, and Regions is down about 60 percent this year but up nearly 100 percent since bottoming out in July, suggesting all three will survive. Three of Regions/Morgan Keegan's mortgage-backed bond funds continue to lead The Wall Street Journal's quarterly list of "worst-performing bond funds," but Morgan Keegan investment banking and brokerage business is a big plus for Regions, earning $92 million more in the first six months of 2008 compared to 2007. The biggest public companies in Memphis are not going the way of Lehman Brothers. The "Memphis Fortune 500 Portfolio," including FedEx ($90), AutoZone ($133), and International Paper ($30), is up 6 percent since April.
The fun/fan index. You can see the Marshall Tucker Band for $5 at the Mid-South Fair this weekend. And thousands will pay $25 for a wristband and that much more on food. The Southern Heritage Classsic last week drew more than 50,000 fans. Tiger football stinks, but basketball starts in a couple of months. If the Grizzlies struggle at the gate, owner Michael Heisley is the one who will feel most of the pain; the local ownership share has shrunk. College hoops should be fun in 2009, with the Tigers nationally ranked and FedExForum hosting the NCAA men's tournament Sweet Sixteen and Elite Eight games.