In Striking Shift, Small Investors Flee Stock Market By GRAHAM BOWLEY Published: August 21, 2010 Full Article: http://www.nytimes.com/2010/08/22/business/22invest.html?_r=1&hp Renewed economic uncertainty is testing Americansâ generation-long love affair with the stock market. Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds. If that pace continues, more money will be pulled out of these mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, when the global financial crisis peaked. One of the phenomena of the last several decades has been the rise of the individual investor. So the turnabout is striking. So is the timing. After past recessions, ordinary investors have typically regained their enthusiasm for stocks, hoping to profit as the economy recovered. This time, even as corporate earnings have improved, Americans have become more guarded with their investments. It may take many years before it is clear whether this becomes a long-term shift in psychology. After technology and dot-com shares crashed in the early 2000s, for example, investors were quick to re-enter the stock market. Yet bigger economic calamities like the Great Depression affected peopleâs attitudes toward money for decades. As investors pulled billions out of stocks, they plowed $185.31 billion into bond mutual funds in the first seven months of this year, and total bond fund investments for the year are on track to approach the record set in 2009.
"Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year" "Staggering?" Hardly, considering the total market cap of US stocks. Do the math on what that is per household. Not even enough to buy groceries for a month. A baldly sensationalist headline.
Has less to do with faith in stocks than with folks needing money socked away in retirement funds and college funds to keep up their current lifestyles.
Think you are overestimating the market investments of individuals. Most individual market investments are in the form of retirement accounts. Worse than a bank run is the loss of faith in the long term retirement investment vehicles. People have generally gotten hammered. Do not understand trading and rely on what ever programs are made available by their employer.
actually it seems a lot historically speaking: http://caps.fool.com/Blogs/the-equity-bull-market-hasnt/436909
well it is interesting. 1. Many americans have grown to hate Wall St. While families lose their homes, and grown men sob as they consider jumping in front of trains, some spoiled Ivy League MBA is snorting cocaine off Mr. Suicide's daughter 2. There seems to be more outrage now than ever before. Not only do more people not trust Wall St. but they have also lost trust in the government. Not only did it bail these guys out, but they are still not in prison (I'm not saying they should be in prison) . 3. Trading and market information has been made more accessible to investors. They can take a more personal role in their finances 4. The baby-boomers are dying, and their kids are getitng OLD. We are in the beginning of a generational transition. Furthermore, new generations are PARANOID. No one trusts the government, the financial system, they don't even trust fellow humans. If you can't even leave your bike outside, why would you leave your nest egg outside? Life is grand when you're making money, there are jobs, the country is building itself, you have wife, kids. Life was so grand, no one seemed to realize that economies become saturated. The men fought in the war, the women weeped, we won, we celebrated. People want growth, it is like crack. Here are the withdrawals. There is planned growth, and there is irresponsible growth. It isn't ALL about fear and greed. People, even non-players, shape the economy. There are periods of worry, and periods of confidence. Confidence does not imply greed. However, confidence can cause tunnel-vision This is something that should be been accounted for years ago. Greed trumped wisdom. Rationality does not imply future prosperity..... We gave the market enough power to shape non-players' lives, considering the market is a function of greed and fear, I'm not shocked. Capitalism is now a mindset, not an economic system. The system screwed the people, and if enough people react, the people will screw the system. Scary You want to make money? Open private caregiver residences, or sell designer coffins, and Chihuahua coffins as well. P.S. YES people are choosing bonds. But the article does not say who is choosing bonds. I would need to know stats on who these people actually are to get to the bottom of this....
I'm thinking that people are getting in an expansive mood. The way it's showing itself is that they are soaking up real estate on the cheap. They will get back to stocks a little later in the expansion...
..... you too could be president it you were a privileged lowlife who snorted coke and got a Ivy MBA.