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Ordinary folks losing faith in stocks
Associated Press ^ | Dec. 27, 2012 5:17 PM EST | Bernard Condon

Posted on 12/27/2012 11:54:32 PM PST by Olog-hai

Andrew Neitlich is the last person you’d 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 he’s 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 don’t 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, they’re 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 ...


TOPICS: Business/Economy; Government; News/Current Events; US: New York
KEYWORDS:
This article uses too many religious overtones and attributes them to the stock market and the government.
1 posted on 12/27/2012 11:54:36 PM PST by Olog-hai
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To: Olog-hai

catastrophic stock market correction in three... two... one...


2 posted on 12/28/2012 12:13:39 AM PST by Casie (Chuck Norris 2016)
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To: Olog-hai; All

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.


3 posted on 12/28/2012 12:17:19 AM PST by gleeaikin
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To: Olog-hai

How much of the “pulling out of the market” has simply been the unemployed cashing in for living expenses?


4 posted on 12/28/2012 12:23:48 AM PST by Psycho_Bunny (Thought Puzzle: Describe Islam without using the phrase "mental disorder" more than four times.)
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To: Olog-hai
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

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.

5 posted on 12/28/2012 12:24:50 AM PST by Pontiac (The welfare state must fail because it is contrary to human nature and diminishes the human spirit.)
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To: Olog-hai
Ordinary folks losing faith in stocks?

Please explain to me why the dow remains over 13K ?

6 posted on 12/28/2012 12:29:22 AM PST by precisionshootist
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To: Olog-hai

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.


7 posted on 12/28/2012 12:59:04 AM PST by Arthur McGowan (If you're FOR sticking scissors in a baby girl's neck and sucking out her brains, you are PRO-WOMAN!)
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To: precisionshootist

Did you read the article?


8 posted on 12/28/2012 1:24:33 AM PST by exnavy (Got ammo, Godspeed!)
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To: Olog-hai

Expect a bunch of this stuff comming from AP prior to the seizure of 401Ks..


9 posted on 12/28/2012 1:27:05 AM PST by mosesdapoet ("A voice crying in the wilderness make streight for the way of the Lord")
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To: Arthur McGowan

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


10 posted on 12/28/2012 2:43:04 AM PST by CGASMIA68
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To: precisionshootist
“Please explain to me why the dow remains over 13K ?”

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.

11 posted on 12/28/2012 3:11:07 AM PST by WhiskeyX
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To: WhiskeyX
Excellent summation, sir!
12 posted on 12/28/2012 3:41:20 AM PST by Shane (When Injustice Becomes Law, RESISTANCE Becomes DUTY.----T.Jefferson)
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To: WhiskeyX

You have to trust your government. You have to trust other governments. You have to trust Wall Street,” says Neitlich, 47. “And I don’t trust any of these.”

Amen to that.


13 posted on 12/28/2012 3:44:14 AM PST by Venturer
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To: Olog-hai

“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.


14 posted on 12/28/2012 3:44:24 AM PST by Monty22002
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To: precisionshootist
Ordinary folks losing faith in stocks?

Please explain to me why the dow remains over 13K ?

Yeah, beginning to look like total manipulation on the numbers, isn't it?

15 posted on 12/28/2012 4:11:47 AM PST by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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To: WhiskeyX
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.

Proof? What are they buying? How? It's obvious something is going on. But, WHAT are they buying or HOW are they doing this?

16 posted on 12/28/2012 4:16:20 AM PST by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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To: Olog-hai

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.


17 posted on 12/28/2012 4:34:42 AM PST by DH (Once the tainted finger of government touches anything the rot begins)
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To: MeneMeneTekelUpharsin
Proof is hard to come by when you have an Obama Administration who defies subpoenas from the House of Representatives in criminal investigations. Nonetheless, some information has been leaking which suggests how the Obama Administration has either been circumventing Federal law prohibiting such Federal investments and simply defied Federal law, confident that Attorney General Eric Holder and compliant Federal judiciary would suppress any investigations into such illegal transactions.

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:

http://www.abovetopsecret.com/forum/thread532757/pg1

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.

18 posted on 12/28/2012 4:47:20 AM PST by WhiskeyX
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To: Olog-hai
Stocks have been in a range for over a year. You don't have to be a gambler nor a timer to see that and make a profit by being more conservative when things look good and more aggressive when the opportunity presents.
19 posted on 12/28/2012 4:51:38 AM PST by jdsteel (Give me freedom, not more government.)
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To: t1b8zs; Arthur McGowan

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.


20 posted on 12/28/2012 4:59:54 AM PST by central_va ( I won't be reconstructed and I do not give a damn.)
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To: MeneMeneTekelUpharsin

The Fed reduces Goldman Sacks cash reserve requirement and in turn Goldman Sacks buys stocks and put them in inventory.


21 posted on 12/28/2012 5:04:07 AM PST by central_va ( I won't be reconstructed and I do not give a damn.)
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To: precisionshootist
Please explain to me why the dow remains over 13K ?


22 posted on 12/28/2012 5:19:04 AM PST by SkyPilot
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To: WhiskeyX
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.

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.

23 posted on 12/28/2012 5:29:37 AM PST by Darth Reardon
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To: WhiskeyX

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...)

Thanks.


24 posted on 12/28/2012 5:31:04 AM PST by CommieCutter
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To: CommieCutter
Much of the overt part of the Fed investmeents are in the financial markets, rather than directly into the stock market. This has come in the form of Federal Reserve purchases of Treasury debt instruments, something like $600 billion in QE2. QE Infinite is following similar approaches.

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.

http://articles.marketwatch.com/2010-09-24/investing/30800018_1_fund-managers-fund-firm-capital-markets

http://articles.marketwatch.com/2010-01-05/commentary/30808959_1_stock-market-trimtabs-investment-research-fed-chairman

http://www.marketwatch.com/story/fund-flows-firm-suggests-government-bought-stocks-2010-01-05

http://www.morgangold.com/news/20121003-fed-using-monetary-policy-to-prop-up-stock-market-as-recession-looms.html

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

http://www.libertylobby.org/articles/1997/19971124fed_market_prop.html

25 posted on 12/28/2012 5:52:07 AM PST by WhiskeyX
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To: t1b8zs

I won’t owe any taxes: It’s gone down in twelve years.


26 posted on 12/28/2012 6:24:00 AM PST by Arthur McGowan (If you're FOR sticking scissors in a baby girl's neck and sucking out her brains, you are PRO-WOMAN!)
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To: central_va
pay off all debt

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?

27 posted on 12/28/2012 6:48:01 AM PST by Right Brother
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To: Olog-hai

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.


28 posted on 12/28/2012 7:10:57 AM PST by Buckeye McFrog
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To: Olog-hai
This article uses too many religious overtones and attributes them to the stock market and the government.

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.

29 posted on 12/28/2012 10:26:03 AM PST by slowhandluke (It's hard to be cynical enough in this age.)
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To: slowhandluke

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.


30 posted on 12/28/2012 10:34:39 AM PST by Olog-hai
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To: Shane; WhiskeyX

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.


31 posted on 12/28/2012 2:30:21 PM PST by newbie 10-21-00
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To: newbie 10-21-00

Look closely at the S&P 500 PE chart back to 1917.

http://www.multpl.com/

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.


32 posted on 12/28/2012 9:02:32 PM PST by WhiskeyX
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To: Olog-hai
Mammon worship? It's hard to do business if you can't talk about it.

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.

33 posted on 12/29/2012 7:41:25 AM PST by slowhandluke (It's hard to be cynical enough in this age.)
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To: slowhandluke

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.


34 posted on 12/29/2012 7:52:32 AM PST by Olog-hai
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