Do you think if or when general population give up stocks ? Will people realize that stock market is just a Giant Ponzi scheme or a giant casino ? and give up ideas to make money from stock market ?
As a general public myself, its awfully tempting to quit stock market and go all CD. Take an average joe who has lost half his investment in the last several years. If he had invested in anything else, he would have been much better off than in the paper money. Stock market - like in pre-1970s - should be only for professionals.
From the 1930s through the 1960s-70s the stock market wasn't perceived as a safe place to invest one's retirement nest egg. Ultimately, it depends on how quickly the market recovers, if it recovers at all. You didn't get this effect after the tech crash because we entered a new bull market fairly quickly, and the dollar-cost-averaging logic seemed to be borne out. If we spend many years in a sideways or slowly declining market, most people would stop contributing to IRAs or stop investing in highly risky assets, and will pass these lessons on to their children.
Well, the perfect psychological storm has been brewing for 50 years.... "Buy the dip.. hang in there, stocks always come back." Now that people are "fully conditioned", they are ripe to be financially crushed should the market decline go much deeper and last much longer. The "uncle" point seems to be when something has declined 90% off of its high. Check out the tech and .com stocks, '00-'02... you'll see a huge volume spike (capitulation) about 90% down from the high price on many, many issues. Our markets currently are down "only" about 50-60%, so a ways to go. Unfortunate and sad.
Art Cashin said it takes about 30 years for the buying public to step back in, then we get another bubble.
It will take a minimum of a decade for this to come back. How is the economy going to grow without consumers using their houses as ATM machines to buy the next generation Hummer? The general public is still buying stocks because the talking heads keep telling them this is the buying opportunity of a lifetime. There is a lot more downside left to come and once the washout occurs Joe Investor will be gone for good.
To your first question, yes I do. Typically historic bear markets do not end until the public genuinely give up on stocks in despair. In the late 30s and early 40s no one wanted to touch stocks. So, one signal I want to see before getting bullish is a sign that people have given up on stocks. The stock market is not a ponzi scheme or casino, because it represents real companies with real earnings (and losses, lol). According to your logic, if Apple started selling for $1 per share and had $30 per share in the bank, and then declared a $10 special dividend, there would still be no reason to buy the stock. Clearly this is moronic, therefore your claim of ponzi scheme/casino is wrong. Remember that all ponzi schemes go bust. No stockmarket has ever gone bust (although some have been closed down by governments). This bear will end when CNBC goes off air, Time Magazine declares the death of equities, and every member of the buy & hold crowd, including Warren Buffett and John Bogle, has been totally discredited.
You don't need general population , that's the main reason why we're so screwed up. More people get in the market , more advantage scumbags will take. 1. Bring back fractions 2. reinstate uptick rule. 3. make violaters pay. And market will go up , you don't need the crowd.
Stock Market IS a ponzi scheme. We have been conditioned to think that come rain or snow stock market ALWAYS does 8%/yr in the long term. Since US economy rarely grows at that pace we have a problem. It is a ponzi in essence that it depends on continuous and dumb buying by the public to perpetrate that fraud. Eventually people will figure out that stock market stagnation of 20yrs+ is quite possible and 8%/yr is unattainable for this part of the century. 11 yrs down the drain. Think about it.