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