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FYI: (Click On Article Title At Top Of Google Search) Retail investors have been like fair-weather fans who leave a baseball game early—only to miss their team’s thrilling comeback. Will their absence limit future gains for the market? Regards, Ted https://www.google.com/#q=Where+Have+All+the+Small+Investors+Gone?+Barron's
I think of myself as a small retail investor even though by SEC classification I am considered an accredited investor.
As I have become a more seasoned and perhaps a better well rounded retail investor I have learned to gague the stock market by several valuation indicators and not just by its price alone. With this, I came up with a valuation matrix which I use to determine just how much of my asset allocation will be held in stocks based upon this matrix. In general, the more expensive stocks become, within my valuation matrix, the less of them I hold. With this, I am currently positioned towards the low range within my equity allocation range for stocks. When stocks have a better valuation matrix I'll increase my percentage I hold in them. In addition, please know that I also employ a seasonal investment strategy that impacts my asset allocation ranges, and positions held, from time-to-time.
And, yes ... I feel most bonds are expensive as measured by their yields.
So, with this ... I am now holding a good amount of cash ... towards the high end within my asset allocaton range ... and, some might even say I am overweight cash due to stocks and bonds being richly valued. So, for me, cash is standing pretty tall at the moment.
Perhaps, the small retail investor has not gone away ... It's just that they hold less in high risk investments as I currently do. And, stocks the last time I checked do have a good deal of risk associated with them ... and, from my perspective, currently so do most bonds.
Years back the retail investor was a bigger part of the market; but, not so much today as big money moves the markets (much through electronic trading) more so than the small retail investor. I'm thinking big money has run the market upward to where it has now become well overbought, through much of the summer, thinking the little guy will now jump in (not wanting to miss the ride) at about the time "big money" has begun to cut an run booking their profits during the run-up. When there has been a good sizeable decline in the market "big money" will reenter driving asset prices upwards just to complete the process again ... and, again ... over time. Now, I sorta play their game and as asset prices move upward and when they become overvalued "in my matrix" I sell and reduce my equity positions into this upward market movement building up my cash position while I await the next market pullback. Then, I'll do some buying and increase my allocation to stocks when better value can be had. My late father taught me this proccess years back and even in today's market where I believe things are somewhat rigged by "big money" and the "flash crowd" this process, that I have described, still keeps working for me. This process follows the old saying ... "Buy low and Sell high." It is nothing new.
Don't get spoofed by some of these articles people get paid to write. Become your own thinker. It could lead to better investing. I'm thinking a good number of small retail investors have stepped away from the market not wanting to be fleeced again while some have become better at their investing craft and better versed in their strategies wanting better investment conditions before they put money to work in the markets.
Anyway, you have now read ... Old_Skeet's take; and, how I employ my "Buy low, Sell high" process. Again, it is nothing new but just a process. Know though sometimes strategies and processes work and other times they don't. Thus far the seasonal "Sell in May" strategy that I follow is currently underwater although it has worked well for me through most of the past years know that it does not work every year. And, with this, some of the strategies that I have used and I have written about in the past might be right for me ... but, not so for you.
Again, do your own due deligence and become you own thinker. It might lead to better investing as it has with me.
Comments
As I have become a more seasoned and perhaps a better well rounded retail investor I have learned to gague the stock market by several valuation indicators and not just by its price alone. With this, I came up with a valuation matrix which I use to determine just how much of my asset allocation will be held in stocks based upon this matrix. In general, the more expensive stocks become, within my valuation matrix, the less of them I hold. With this, I am currently positioned towards the low range within my equity allocation range for stocks. When stocks have a better valuation matrix I'll increase my percentage I hold in them. In addition, please know that I also employ a seasonal investment strategy that impacts my asset allocation ranges, and positions held, from time-to-time.
And, yes ... I feel most bonds are expensive as measured by their yields.
So, with this ... I am now holding a good amount of cash ... towards the high end within my asset allocaton range ... and, some might even say I am overweight cash due to stocks and bonds being richly valued. So, for me, cash is standing pretty tall at the moment.
Perhaps, the small retail investor has not gone away ... It's just that they hold less in high risk investments as I currently do. And, stocks the last time I checked do have a good deal of risk associated with them ... and, from my perspective, currently so do most bonds.
Years back the retail investor was a bigger part of the market; but, not so much today as big money moves the markets (much through electronic trading) more so than the small retail investor. I'm thinking big money has run the market upward to where it has now become well overbought, through much of the summer, thinking the little guy will now jump in (not wanting to miss the ride) at about the time "big money" has begun to cut an run booking their profits during the run-up. When there has been a good sizeable decline in the market "big money" will reenter driving asset prices upwards just to complete the process again ... and, again ... over time. Now, I sorta play their game and as asset prices move upward and when they become overvalued "in my matrix" I sell and reduce my equity positions into this upward market movement building up my cash position while I await the next market pullback. Then, I'll do some buying and increase my allocation to stocks when better value can be had. My late father taught me this proccess years back and even in today's market where I believe things are somewhat rigged by "big money" and the "flash crowd" this process, that I have described, still keeps working for me. This process follows the old saying ... "Buy low and Sell high." It is nothing new.
Don't get spoofed by some of these articles people get paid to write. Become your own thinker. It could lead to better investing. I'm thinking a good number of small retail investors have stepped away from the market not wanting to be fleeced again while some have become better at their investing craft and better versed in their strategies wanting better investment conditions before they put money to work in the markets.
Anyway, you have now read ... Old_Skeet's take; and, how I employ my "Buy low, Sell high" process. Again, it is nothing new but just a process. Know though sometimes strategies and processes work and other times they don't. Thus far the seasonal "Sell in May" strategy that I follow is currently underwater although it has worked well for me through most of the past years know that it does not work every year. And, with this, some of the strategies that I have used and I have written about in the past might be right for me ... but, not so for you.
Again, do your own due deligence and become you own thinker. It might lead to better investing as it has with me.
I wish all ... "Good Investing."