The boomers will have to rely on income (bonds, dividends, working) rather than asset speculation (stock prices, real estate) for their retirement. An entire generation that thought they'd all be millionaires when they're 60 suddenly realizing they're a dime a dozen.
If only they would have gone all in at the bottom of the market in March they would be alright now.. But markets always move in the way that hurts the crowd the most, no?
There is a study out on the behavior of retail investors in stock and bond mutual funds. As one would guess they tend to buy tops and sell bottoms, grossly underperforming in the indexes over time. Over the past 20 years investors in stock mutual funds have underperformed the S&P500 by 6.5% a year by buying tops and selling bottoms. http://www.qaib.com/showresource.aspx?URI=advisoreditionfreelook&Type=FreeLook
...................................................................................... People buy "marketing"....and journalism.... And "money always follows performance".... In either direction.... Cattle do what cattle do....
If only they'd gone all in as of March? When most of them had just had 40% to 80% of whatever they did have invested wiped out? As in, if only they timed the market perfectly, just prior to their retirement? As in, there won't be a absolutely substantial equity market correction in the near term, as the economic fundamentals absolutely continue to deteriorate, and equity p/e ratios are well ahead of the terrible economic fundamentals, forecasting a lot of hope, if not prayers. We're going to see how much more costs businesses can extract in order to try and meet artificially low earnings expectations in Q3, after they've already taken a chainsaw to much of their overhead/costs. They're certainly not going to get there, with select few exception, on the back of revenue growth.
There was a bank in my country (Fortis). More then 200 years old and trough a series of acquisitions one of Europes new banking giants with a stockprice of +30 Euro a share not more then a year or 2 ago. The most widespread stock in my country from pension funds to retirees, teachers, the royal family, housewives and nuns. As good as government bonds but the stock offers a higher yield. Anyway, to cut the story short they kept saying everything was AOK, then Lehman failed and creditmarkets shut, turns out they were sitting on a huge pile of shit, the group was partially nationalised, partially sold to BNP Paribas. Stockholders holding the bag at 0.50 euro a share for some unsellable toxic CDO's and 20% of the insurance company. Today the stock is at 2.60. That's a 400% rise in 6 months and I know both personally a whole range of people who bought bellow 1 euro as there are many people on messageboards who have made the same decission to buy cheap even though 'the fundamentals were badly deteriorated. So you have the majority of the population brutaly awakened to the notion that what they thought to be safe wasnt that safe in reality and you have a minority who gained from betting against the odds. Harsh but hasnt this been the way it has always been? And now the population is on a saving binge because at least that way you will get to keep your money. Has the herd became savy at last?
No one in the world has this ability. Usually, those picking tops and bottoms are always being surprised that the trend persists, rather than turning on wave C or oscillator X, etc. As someone once said, "The Market can be irrational longer than you can be solvent."
I agree you can not blame anyone for not having picked the bottom in march after one of the biggest market crashes of all time but could you say the same about people who were 100% long in the stockmarket going into 2008?
DeBaser, I thought about what you wrote regarding loading up on the financials when many of them were near $1 or $3 or so. It would have taken an incredible leap of faith to buy many of these banks and such at the meltdown period, as the government had demonstrated it would not save all financial institutions (Bear Stearns, WaMu, IndyMac, etc.). I could see someone making a bet with play money on some of those at that time, but I can't see older investors, especially, loading up on those with any significant amount of the retirement cash in their portfolio.