Skip to comments.Ordinary folks losing faith in stocks
Posted on 12/27/2012 11:54:32 PM PST by Olog-hai
Andrew Neitlich is the last person youd expect to be rattled by the stock market. He once worked as a financial analyst picking stocks for a mutual fund. He has huddled with dozens of CEOs in his current career as an executive coach. During the dot-com crash 12 years ago, he kept his wits and did not sell. But hes selling now. You have to trust your government. You have to trust other governments. You have to trust Wall Street, says Neitlich, 47. And I dont trust any of these.
Defying decades of investment history, ordinary Americans are selling stocks for a fifth year in a row. The selling has not let up despite unprecedented measures by the Federal Reserve to persuade people to buy and the come-hither allure of a levitating market. Stock prices have doubled from March 2009, their low point during the Great Recession.
Since they started selling in April 2007, eight months before the start of the Great Recession, individual investors have pulled at least $380 billion from U.S. stock funds, a category that includes both mutual funds and exchange-traded funds, according to estimates by the AP. That is the equivalent of all the money they put into the market in the previous five years. Instead of stocks, theyre putting money into bonds because those are widely perceived as safer investments. Individuals have put more than $1 trillion into bond mutual funds alone since April 2007, according to the Investment Company Institute, a trade group representing investment funds.
(Excerpt) Read more at bigstory.ap.org ...
catastrophic stock market correction in three... two... one...
A good friend of mine pulled out of the market several months ago, but he just made a sizable cash withdrawal from his 401k so he can snap up bargains next year. Also a number of companies have large amounts of cash that they are just not spending.
How much of the “pulling out of the market” has simply been the unemployed cashing in for living expenses?
Sure the government is doing exactly the wrong things to give the market confidence.
If the government wanted the market to recover they would cut government spending and put a moratorium on new regulations. They would start an initiative to repeal unnecessary and duplicative regulations.
It certainly would help to repeal Obama Care!
Make it cheaper and easier to run a business and the market will recover like gangbusters.
Please explain to me why the dow remains over 13K ?
I am pulling out every penny on the date I am allowed out of my Roth IRA without a penny, in January. I just hope it’s before the Crash.
Did you read the article?
Expect a bunch of this stuff comming from AP prior to the seizure of 401Ks..
Dont be foolish.....its tax sheltered(for now).Jittery? There has got to be a low to zero holding in the plan..Move it there.Cashing out statement indicates a slight lack of financial knowledge.
Cash is king and so is knowledge
Bernanke and the Federal Reserve policies have been rapidly devaluing the dollar by the issuance of vast amounts of fiat currency. Every time two fiat dollars are added to the money supply, the theoretical value of an existing dollar already in circulation is cut in half. The decreasing value of a dollar means you have to use more dollars than before to buy the samee asset whose intrinsic value is less affected by the devaluing of the dollar currency. The price of a cheeseburger or a share of a Dow30 corporation trend upwards as the value of a dollar trends downwards.
Countering the upward trend due to the devaluation of the dollar is a downward trend due to impairments of the intrinsic values of the corporations and their stock. Reduced employment results in reduced consumer spending and reduced corporate sales. As the markets shrink and wither, corporate profits require innovative means to expand their markets or become more cost efficient and profitable in a shrinking market. When too many corporations appear to be losing too much of their intrinsic value because of limitations upon their markets, efficiency, and/or profitability, they become ripe for significant pull backs against the upward trend caused by currency devaluations.
To halt these pullbacks before they could reverse the Bull market into a Bear market, Bernanke at the Federal Reserve and Geithner at the Treasury have been pumping trillions of your taxpayer dollars into the stock market to prop up the market during the elections and Congressional negotiations. This further distorted the economy and markets by vastly increasing the money supply, further devaluing of the dollar, massive manipulations of stock prices, and creation of many levels of uncertainty for investorrs. Investors know full well that the stock prices are inflated into a gigantic bubble as a result of the currency devaluations and the market participation and manipulations. As all such financial Ponzi schemes and bubbles must eventually collapse, so too must the current markets. Its only a question of when and how the collapse will occur, and how Democrats will attempt to blame Wall Street and the Republicans for the inevitable consequences of the Democrat fiscal policies.
You have to trust your government. You have to trust other governments. You have to trust Wall Street, says Neitlich, 47. And I dont trust any of these.
Amen to that.
“The dividend discount model (DDM) is a way of valuing a company based on the theory that a stock is worth the discounted sum of all of its future dividend payments”
The only way to make money on stocks is this. It takes a huge investement, but low risk and reasonble return. Riding the stock prices is a gamble. Nobody really wants to gamble that has any sense.
Please explain to me why the dow remains over 13K ?
Yeah, beginning to look like total manipulation on the numbers, isn't it?
Proof? What are they buying? How? It's obvious something is going on. But, WHAT are they buying or HOW are they doing this?
I got out of the market a while back after it dawned on me that it is nothing more than a game for “the big boys” since they have the ability to manipulate the market by high frequency trades and massive machine generated trades.
If (and when) the crash comes it will be within a heart beat and the average investor will not even have a chance to sell their investments while the bottom drops out.
Overnight trades were the ones that scared the hell out of me and one day millions of investors will go to sleep and wake up the next morning to the fact that the market collapsed while they slept.
No, my money is in my hands...not tied up in some manipulated scam that is not even based upon the old way in which stocks were actually valued upon the company solvency, net worth and future value.
Stocks are a very dangerous game to play today.
Inquiries into such activities can begin with the Plunge Protection Team (PPT) Working Group on Financial Markets. They have been using the futures markets to prop up the stock markets for some time, but there have been some concerns about the Obama Administration's role in making the PPT activities unprecedented and questionable.
See for one example:
The other means are much murkier and involve a wide variety of indirect approaches towards using TARP appropriations (GM, AIG, and so forrth), coordination with George Soros and others to make special deals that give the effect of federal monies leveraging third party investments in the markets.
Don’t listen to the worm tongue “security” guys. Cash out, pay off all debt and the rest invest in Gold. Then get a good nights sleep.
The Fed reduces Goldman Sacks cash reserve requirement and in turn Goldman Sacks buys stocks and put them in inventory.
Not half (unless there were exactly two dollars in circulation to begin with). More like 100*(1-N/(N+2))%, where N is the number of dollars in circulation initially.
Great post but I have a question.
I understand that money gets printed and added to the supply of money but exactly how does the Federal Reserve put money directly into the stock market?
(I’ve heard people talk about the plunge protection team etc...)
What has some people concerned are the activities of the Plunge Protection Team with its direct intervention into the futures markets for stocks. The Fed and Obama Administration have widely announced how they are using the Treasury and the Federal Reserve to prop up the stock market as a means of executing fiscal policies. What is hard to know are the sweetheart deals being made secretly which leverages these Fed asset purchases and TARP asset management to perhaps unlawfully manipulate the stock market and individual stocks despite Federal law.
Fed Memo Reveals Action to Prop Up Market
Big Brother has his finger in the stock market pie, regardless of laws and regulations.
By Martin Mann
I won’t owe any taxes: It’s gone down in twelve years.
I disagree. If hyperinflation is indeed looming, then holding on to a fixed interest debt (i.e. mortgage, auto loans, etc.) is advantageous. If the dollar devalues 50%, then your fixed debt has, in effect been reduced by 50%. Why would I want to pay off a loan in today's dollars when I can pay much less in tomorrow's dollars?
All part of the plan to get us to happily sign over our 401K’s to Theresa Ghilarducci’s Great National Pension Scheme when it is proposed.
religious overtones? The article used 'gospel' once, and cult a few times. They clearly are used in a metaphorical sense, not a theological one. And it was 'gospel of investing' and 'cult of equities', so they were in reference to Wall Street, not the government.
I'm also sure the 'swinging for the fences' comment did not refer to anything going on at Yankee Stadium.
You might as well hang up your rhetorical spurs if you can't handle such metaphors.
In any case, this an AP story, short on facts and long on interpretation. The whole point is summed up in the fact that fewer folks trust our government or other governments, and almost nobody trusts Wall Street.
Too many metaphors is too many metaphors. Never mind the shadow of Mammon worship going on there. I reserve my right to take umbrage at such metaphors in any case and care not for who finds it odious or otherwise troubling.
Are you actually defending the liberal media? I hope I am mistaken.
Excellent sumation except for the it’s wrong part. The S&P has a historical P/E ratio of about 15.5. It’s at 16 now. The market isn’t overvalued.
Look closely at the S&P 500 PE chart back to 1917.
Notice how the ratio peaked at 123.79 in May 2009. This means the PE ratio was skyrocketing in the period May 2007 through January 2009. at the same time as individual share prices plummeted and the market lost a major fraction of its average per share price level. In other words, the price earnings ratio is not necessarily by itself an indicator for an impending Bear market or market panic and crash. in that period the crash was due to a economy wide credit and liquidity crisis.
Defending the liberal media? Nope, just arguing that an AP article that uses the word 'cult' isn't really talking about religion, just using a metaphor for some people not really thinking it through about equities.
There really isn't a 'cult of equities', the AP writer has it quite wrong. The folks he was talking about are the Wall Street equities brokers, whose job it is to sell equities, so of course it looks like they aren't thinking it through. They are simply lying through their teeth about how equities always being the right choice.
You get to take as much umbrage as you want. I'm just pointing out that you have crossed the silly line in this case, IMHO.
There is a difference between doing business and Mammon worship. And it’s not like I agree with the AP’s assessment besides, so I think we’re on the same page there.