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It wouldn't surprise me. I get it - the SEC isn't going to do anything about HFT issues and other problems, the market is more volatile, people may be disappointed with 10 year returns and a gillion or other issues. However, what are people going to do, sit in cash that is being debased all the time? I do wish there was large-scale microlending in this country; I think it would really do a lot of good and maybe people could get a small interest %. Oh well.
Hi scott, I noted this too; in last weeks fund boat write; as a concern of mine regarding a large portion of the individual investors. The recent market actions; AND if there were to be another big sell will indeed take many away from equities forever. We here know there are funds with which to provide decent returns, but some investors will shy away from anything but a CD or related. While currently not a large portion of the population, the "barter" community will continue to expand for people to swap services and also avoid money that is reported and taxable. This is a historic situation of what happens; and of course, has not changed for many years in underdeveloped nations. FOLKS helping each other with stuff and avoiding the government machine. Regards, Catch
I am not worried. It's al human. Some will leave now saying they will never get back. Some of them will change their mind at a later time when they feel everyone is making hand over fist and they are left out. Eventually, they will get back to market only to be hit again. They are inflicting wounds because of lack of investment discipline and policy. These people should probably stick to CDs and probably they will the target audience for annuities.
Agree with authors last point. Sometimes a good way to figure out what the crowd is doing is look at your own behavior. Being a early boomer I've slowly ratcheted up the allocation to cash/fixed income in recent years, but nothing drastic. In 07/08 it was 15%, now it's 20%. (actually alot higher counting what's in balanced funds.) Point being this is a natural thing to do as you age and probably having some impact on markets. Hard to calculate it however. As we slowly kick the bucket and that money is inherited by youngsters, could have the opposite effect.
Since I was retiring at 65 later in the year, last Jan I reallocated my all-equities funds 401k to half 3 percent guaranteed fund and left half in a mix of equities funds. It had a decent gain thru June 30 when I rolled it over to a Vanguard IRA, half in Total Bond Market Index, 40 percent Total Stock Mkt and 10 percent in Total International Index. Though I'm still down about 4.5 percent from the recent peak, it was a bit comforting last week to see the bond fund gains cushioning those awful losses in equites funds. Yes, I know bond funds can lose too, but Vang's Total Bond Market fund held up nicely in 2008-09 too.
The biggest outflows were during the 2008-2009 meltdown. Some of those folks vowed never to return to the stock markets. The recent volatility will only confirm their decisions. Those folks not only lost a lot in the selloff, but they will probably never recover what they once had. We only have a handful of clients who insisted on bailing near the bottom of the 08-09 crash, and they are way behind other clients now. Who knows, they could be right about the future. But I have always been partial to a half-full glass than a half-empty one. And as another poster says, there are a lot of lower-risk options that have very compelling track records. So it's not like folks have to be more than 50% allocated to stocks to gain a return that I think will be way ahead of CDs and bonds over the next 5 years or so. I mean, how difficult is it to find something better than 0.5% to 1.5%? Maybe no guarantee, but when you factor inflation, those yields are in the hole. And taxes push it even farther down the hole.
Comments
I noted this too; in last weeks fund boat write; as a concern of mine regarding a large portion of the individual investors. The recent market actions; AND if there were to be another big sell will indeed take many away from equities forever. We here know there are funds with which to provide decent returns, but some investors will shy away from anything but a CD or related. While currently not a large portion of the population, the "barter" community will continue to expand for people to swap services and also avoid money that is reported and taxable. This is a historic situation of what happens; and of course, has not changed for many years in underdeveloped nations. FOLKS helping each other with stuff and avoiding the government machine.
Regards,
Catch
I agree with you, as to the nature of folks.