Americans Miss $200 Billion Abandoning Stocks

[question everything]

Bloomberg News

Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis.

Assets in equity mutual, exchange-traded and closed-end funds increased about 85 percent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor’s 500 Index’s 94 percent advance, according to data compiled by Bloomberg and Morningstar Inc. The proportion of retirement funds in stocks fell about 0.5 percentage point, compared with an average rise of 8.2 percentage points in rallies since 1990.

(snip)

Money has gone to the relative safety of fixed-income investments. Managers who specialize in corporate bonds and Treasuries have received nearly $1 trillion in fresh cash since March 2009, ICI data show. Federal Reserve Chairman Ben S. Bernanke’s zero percent interest-rate policy and the lowest inflation in almost 50 years have helped spur a 29 percent rally in debt securities since Obama’s first term began, according to the Bank of America Merrill Lynch’s U.S. Corporate and Government Index through the third quarter.

(snip)

Even investors who were rewarded by sticking with stocks have had to endure record daily price swings and three so-called corrections of at least 9.9 percent. In August 2011, after S&P stripped the U.S. of its AAA credit rating, the Dow Jones Industrial Average (INDU) alternated between losses and gains of 400 points or more on four consecutive days, the longest streak on record, data compiled by Bloomberg show.

Daily swings in the S&P 500 averaged 1.74 percent in 2008, the most for any year since the Great Depression. The index rose or fell 1.58 percent on average in 2009, the third-biggest year on record for volatility, while 2011’s 1.24 percent average moves made it the seventh-biggest, data compiled by Bloomberg show. Volatility is down to an average daily move of 0.59 percent so far this year, data show.

(snip)

http://www.bloomberg.com/news/2012-12-24/americans-miss-200-billion-abandoning-stocks.html

[PSPS]

1. LOL. Yeah, sure. "Hey folks, put all your money in our casino! You're a sure winner! honest!!!1!"

This piece reminds me of the heinous Louis Rukeyser and his "Wall Street Week" scam.

[Warpy]

2. They also missed out on dividends from that stock

which were likely higher than the zero point nothing that the "safer" investments were generating.

Now the Republicans are talking openly of defaulting on the t-bills held by the US working public, the ones that represent all the money they robbed from our social security payments to fatten the rich. If they do default on a single one, the rest will be dumped overnight worldwide.

People who ran to "safety" in the fall of 2008 have screwed themselves several different ways. Panic is absolutely the worst reason to make any big decision, especially a financial one.

[mbperrin]

5. Seriously, before they think of default, they need

to figure how many bondholders have bought an AR-15 recently.

I don't think I'm kidding here.

[Warpy]

6. No, you're not far off

consider the default would trigger a cascade reaction with this country absolutely dead broke and the economy in complete ruin with we the people living in rags because we don't even make cloth any more over here.

I think that would do it.

[snot]

3. We all understand that the market is rigged against small investors.

[question everything]

4. I am a small investor

but we kept all the funds in our IRA accounts - stock and bonds - and the taxable one and we are back to where we were in the summer of 2007. Actually surpassing, since we continued to contribute to the IRA.

If the ones who escaped the market did so because of "communist" Obama, then they deserve what they got.

[Warpy]

7. Exactly, I'm a small fish, too

and I looked the return on the "safe" stuff in mid 2008 when it looked like the whole house of cards was going to topple any second and considered getting out and jumping back in right after it all fell and discarded the idea. Yes, it would have doubled my net worth by now, but it would have been an enormous PIA that would have cut the income from some of the legacy stocks my dad bought in the 1950s.

I don't need the increased net worth, thanks. So I stayed put and got everything back, maintaining my income for the duration.

[Ikonoklast]

8. Many fled because they cashed out, needing the money to survive.

Not all because they wanted to, but because they had to.

[question everything]

9. Of course

but this story was about moving funds from stock to bonds or to cash.

[Ikonoklast]

10. It wasn't a bad strategy, at least to begin with.

But after a year...

Fear paralyzed many.

[snot]

11. In my own case, the whole thing has looked over-valued for years, and that's still the case --

combine that with the high-frequency trading and other shenanigans going on, and I literally just bring myself to trust what's going on there.

[Ikonoklast]

12. Look at Enron, just as a furrinstance...

It was a great investment, right up to the moment it was a disaster.

It only takes one like that to kill a small investor, even if diversified nicely, if you didn't get out in time, it killed your entire year.

[sendero]

13. I wonder if this same bozo author..

... will talk about how sad it is that so many "investors" lost half their savings AGAIN in the next crash.

The "stock market" is controlled and run completely by the big money men and if your piddly retirement portfolio accidentally makes a few bucks I would NOT assume that means there is not another 2000 or 2008 around the corner because there is.