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How Sept. 11 hit funds
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October 22, 2001: 10:23 a.m. ET
Some top fund managers relate their experiences on a tragic day.
By Jason Zweig
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NEW YORK (CNNmoney) - Nobody ever really gave Christopher Davis a good reason why he had to fly to Chicago. Normally, the directors of his eight funds started their quarterly board meetings at 8 a.m. sharp on the 94th floor of 2 World Trade Center.
But this meeting -- set for Sept. 11 -- had been switched to 11 a.m. at the Westin O'Hare Hotel in Chicago. And Davis, portfolio manager of the $21 billion Davis New York Venture Fund, was annoyed at having to leave town.
"To this day I don't really know exactly why we moved the meeting," he says. "Something about how some of the directors on the West Coast didn't want to come all the way to New York."
So instead of settling into a soft chair in the regal board room of Fiduciary Trust Company International, Davis found himself sardined into a coach-class seat on an American Airlines flight heading from La Guardia Airport to Chicago. It was just before 9 a.m. as the plane lofted over Manhattan. Then, as it banked southwest over the George Washington Bridge, the pilot announced: "Ladies and gentlemen, if you look out the left side of the plane, you can see there's something going on at the World Trade Center."
Davis, sitting near his marketing director Russell Wiese, spotted the black smoke gushing up from the north tower. Even as a former seminary student, Davis couldn't stifle a quiet curse. Grabbing his cell phone, he called his office in Manhattan to find out what was going on.
Moments later, recalls Davis, "Russell and I saw this huge flash in the second tower. We never saw that it was a plane that hit, but the flash was blindingly bright." Only later did Davis learn that a hijacked aircraft had struck just one floor below the board room where his meeting would have taken place.
Also in this report:
Fidelity managers decide to stay in stocks.
Bill Miller plays offense.
Strong managers react fast.
Tech funds are bullish.
Value funds find bargains.
Vanguard calms investors.
Money managers have been struggling in recent weeks to choke back their anguish and fear, reassess what's important and carry on with their business and family lives. At a time like this, investing may seem irrelevant, even meaningless; thinking about money may feel almost indecent.
But the fund manager's job is to make decisive judgments on behalf of shareholders, even when circumstances are changing at blinding speed. In the weeks following the catastrophe, MONEY interviewed dozens of leading figures in the fund industry to learn what they were feeling, thinking and doing in the first 10 days after their world was torn apart on Sept. 11.
What emerged is a real-time account of how some of the best minds on Wall Street wrestled with this financial and personal crisis. It was a time without parallel. The nation's stock markets closed for four days, the longest shutdown since the Great Depression. And when the markets reopened on Sept. 17, the Dow Jones industrial average suffered its worst one-day point loss in history and its worst weekly decline since World War II.
In one chaotic week, investors lost $1.4 trillion. The emotional toll was worse. Everyone in the investment community went back to work knowing that friends and acquaintances were still missing. Among the dead was David Alger, head of the Alger Funds and a friend and mentor to many managers. Cantor Fitzgerald, which handles trades for mutual funds, lost some 700 employees, with their last desperate moments broadcast live via conference calls to trading desks at several fund companies, including Vanguard.
In the days that followed the disaster, fund managers faced alarming uncertainties they had never previously known. Had the financial rules fundamentally changed, forcing investors to value stocks differently? Had market risk permanently risen?
For Chris Davis, who years earlier had considered becoming a priest, one haunting question was whether he was wasting his life. "Charlie Munger [Warren Buffett's partner] once said to me, 'Money management is a low calling,'" says Davis. "That really resonated with me." With the market closed during the week of the attacks, Davis took some time for soul searching. He decided, a little shakily at first, that being a fund manager enables him to help investors while also constantly learning.
"You're incredibly lucky," he told himself. Davis' next priority, once all his employees were safely back in the office, was to conduct an evacuation drill. "Having some sense of what to do in an emergency makes people feel better," he says. "That's part of recovering." Only then did he and his team start probing their portfolios for weaknesses.
-- Additional reporting by Aravind Adiga, Amy Feldman, Pablo Galarza, William Green, Laura Lallos, Jeff Nash, Ilana Polyak, Penelope Wang and Suzanne Woolley, 
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