As I read these articles, I'm struck by the constant bearish refrain that "Investors are tapped out". How the heck do these folks know what Investors "are", or "are not"? I'm an investor: Cautious? Distrusting? Hell yes. "Tapped out"? Not even close. I certainly don't get the feeling that a majority of the MFO folks are "tapped out", and you-all surely qualify as investors.
A flood on money going to bonds and cash, for sure. Does that mean that it can't or won't trend towards equities again at some point? I may not know the "point", but surely it's out there someplace.
⇒ Doom, Gloom and the Coming Demise of the U.S. Economy⇒ Money moves 5 doomsayers are making now
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So much retail money has gone into fixed income over the years, that when that tide turns either:
A:) The crowd gets upset once again and now doesn't want anything to do with stocks or bonds. A lot of signs continue to show many (not all, many) retail investors aren't back and aren't going to be for a while.
B:) That money comes into stocks, possibly creating the last stage before things top out for a while
Doug Kass mentioned a large short position in treasuries on Kudlow last night.
Faber is not entirely bearish on stocks, either. An example he used in 2011 and again recently:
"Look at the history, for example, of Germany, for the last 100 years. They had World War I. They had the hyper-inflation in World War II. The bond-holders got wiped out three times. If you owned Siemens, and you still own Siemens today, it was not a fantastic investment, but at least you still have something. You were not wiped out. I think that in equities you will be better off because you have an ownership in a company, than by being the lenders to companies, and the lenders, especially, to governments."
As for profits not being worth anything, Zimbabwe's stock market went parabolic, but you couldn't get three eggs with it. Weimar. Not saying we will have that happen, but I don't think you'll see DOW 6,000 (at least in nominal terms) again.
Personally, I have a smallish group of funds, and a number of stocks of companies that I find personally exciting (and largely fall within "themes") and plan on holding for a long time. I'm trying for a year or not really doing much of anything.
As for Hussman, I'd be interested in him coming out with an unhedged fund that was simply a very, very conservative stock fund. I'm curious how Hussman Strategic would have performed over the last year or two had it not been hedged.
As for the consumer being "tapped out", I think:
They're not all tapped out, however... How much money has been made available for random spending by people who aren't/weren't paying their mortgage? You have people essentially living without having to pay for years.
Student loans and college tuition have grown out of control, and people of that age group are going to be facing extraordinary debt and will have, as a group, less to spend. In general, younger generations will not be able to pick up what older generations retiring are going to leave off - and I think that includes both stocks (as Rob Arnott discussed recently) and houses. I don't think the easy monetary policy is going anywhere for quite a while.
" If so, I'd just observe that negative stories & commentary generally receive greater attention than positive ones do - easily tested by tuning into CNN."
Someone should tell CNBC, maybe their ratings would be better. Instead, you have segments like them begging and pleading for people to send in "Tales of the Recovery". (and then quickly saying "You can send in things that are negative too, like empty malls, but make sure the mall is open first.")
http://www.smartmoney.com/invest/stocks/strategist-stock-market-should-double-again-1332884313591/?cid=djem_sm_dailyviews_h
A curious source of financial news. Have tried to understand their demographics without much success. Surveys show viewers to be highly educated, successful, professional, etc. Problem is - certain number have it on a second set off to the side with the volume muted to monitor all the on screen stats. Number who actually listen to or take investing cues from these celebrities is - seems to me - most elusive to measure.