Stocks? No Thank You Says Nation’s Top Economist

3:28 EDT WASHINGTON (AP) — So where does Federal Reserve Chairman Alan Greenspan, who knows more about the economy than almost anybody, put his own money? No irrational exuberance for him. He shuns the stock market for the safest investment of all — short-term Treasury bills.

Greenspan’s desire to avoid any conflict of interest guides that decision, says Fed spokeswoman Lynn Fox. But investment advisers caution that others shouldn’t necessarily follow his lead, even with the market’s recent rocky course.

“If you don’t have a growth element in your portfolio, you’re not keeping up with inflation,” said David B. Yeske, a certified financial planner in San Francisco on Tuesday. “So he’s probably losing ground with each passing year.”

Not that the central bank chairman has much to worry about in that department, according to Greenspan’s financial statement, made available Tuesday.

The man with his finger on the economy’s pulse owned at least $2.4 million in short-term Treasury securities and had at least $466,000 in money market and credit union accounts at the end of 1997, according to the statement dated June 29.

He also owned a Norfolk Southern Corp. bond worth at least $500,000 and a Massachusetts state bond worth at least $100,000.

That’s on top of his annual salary of $136,700, not to mention the salary and assets of his wife, NBC-TV correspondent Andrea Mitchell, 51, whom he married in April 1997. Unlike Greenspan’s holdings, his wife’s portfolio is weighted heavily toward stocks.

The asset figures are not precise because the value of each asset is given as a range.

Greenspan wasn’t required to disclose gifts from friends but he listed wedding gifts from colleagues in government, anyway. They included glass servers and a silver ladle, valued at $300, from Treasury Secretary Robert Rubin, and folk art of undetermined value from House Banking Committee Chairman Jim Leach, R-Iowa.

Greenspan has filed an annual financial disclosure every year since he was sworn in as Federal Reserve chairman in August 1987. But until this year it said simply that most of his assets were in a blind trust worth more than $1 million. He chose to liquidate the trust after his marriage to Mitchell so the couple could make joint financial plans, Fox said.

It was probably an expensive decision.

“He probably gave up a couple hundred thousand dollars a year in investment income,” Yeske guessed.

Many people of Greenspan’s age tend to shun stocks in favor of investments such as Treasury securities, which protect against loss of principal, said Scott M. Kahan, president of Financial Asset Management Corp. in New York City.

But that can be a mistake. If Greenspan were his client, Kahan said, he’d warn the chairman he can’t count on inflation remaining as low as it is now. Prices have risen at a 1.5 percent annual rate so far this year.

“A 72-year-old man in good health could live another 20 years, or even 25,” Kahan said. “Plus his wife is 20 years younger.”

But then Greenspan is the Federal Reserve chairman and he does have some influence over inflation and the stock market.

Maybe he knows more than the investment advisers?

Two years ago, Greenspan warned of “irrational exuberance” in financial markets. Last month, he told Congress that “history tells us there will be a correction of some significant dimension.”

The Dow Jones industrial average had just hit a record high five days earlier. Since then, it’s been declining and, despite some recovery, closed Tuesday more than 600 points below the peak.