Rambling around the financial sites looking for distractions between trades, I keep hearing about "the wounded investor" and about how "he is fed up and not coming back for a while." Does anyone have credible/documented info on how big a role Joe Sixpack really plays in this market, and how badly his "departure" is affecting liquidity and movement, if at all (aside from the fact that there are fewer suckers around to sell lower and buy higher these days). My intuitive guess is that the everyman's role is fairly small potatoes compared to the institutionals, funds etc., who have to play and will continue to play regardless of conditions. Not to mention the fact that Joe's retirement funds are still coming into the market because you can only buy so many bonds and gold coins before you have to turn back to equities. Chasing the jello around on the plate, as Fleckenstein sez. I know I've sort of answered my question w/ my own opinion here but I'm curious to hear what others think about the "departure" of the "wounded investor."
It's pretty well documented that the "retail day traders" have had their numbers cut significantly over the last year or two. This may be the "wounded investor" you're referring to. The public who all ran to open their etrade accounts and such, have also had their numbers cut significantly. I am not really sure if this has an effect on the overall markets anyway. Since 50% or more of the listed trades are done by professionals and institutions, I doubt if "joe six pack"(s) absence will be noticed. The only concern that may be justified is the reduced number of actual trades (retail tickets) executed by brokerage firms. This has an impact on the "appearance" of market viability....more interest from the public sector, etc. Remember, CNBC only had a few viewers 5 or 6 years ago, and now they're "stars" (at least in their own eyes). My 2 cents.... Don