Thursday, August 26, 2010

Americans Pulled USD 53.279 Billion Out Of The Equity Markets

Posted recently:

  1. Main Street Telling Wall Street That The Equity Markets Stinks!
  2. Stocks Rally And US Equity Investors Rallied To Get Out Of the Equity Markets

This issue was actually highlighted on the NY Times on 21st Aug 2010. ( :P )

In Striking Shift, Small Investors Flee Stock Market

A short passage from that article.

  • ..... Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.

    One of the phenomena of the last several decades has been the rise of the individual investor. As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.

    So is the timing. After past recessions, ordinary investors have typically regained their enthusiasm for stocks, hoping to profit as the economy recovered. This time, even as corporate earnings have improved, Americans have become more guarded with their investments.

    “At this stage in the economic cycle, $10 to $20 billion would normally be flowing into domestic equity funds” rather than the billions that are flowing out, said Brian K. Reid, chief economist of the investment institute. He added, “This is very unusual.”

    The notion that stocks tend to be safe and profitable investments over time seems to have been dented in much the same way that a decline in home values and in job stability the last few years has altered Americans’ sense of financial security.

    It may take many years before it is clear whether this becomes a long-term shift in psychology. After technology and dot-com shares crashed in the early 2000s, for example, investors were quick to re-enter the stock market. Yet bigger economic calamities like the Great Depression affected people’s attitudes toward money for decades.

    For now, though, mixed economic data is presenting a picture of an economy that is recovering feebly from recession.

    “For a lot of ordinary people, the economic recovery does not feel real,” said Loren Fox, a senior analyst at Strategic Insight, a New York research and data firm. “People are not going to rush toward the stock market on a sustained basis until they feel more confident of employment growth and the sustainability of the economic recovery.”

LOL! The economic recovery does not feel real. What an under statement. :P

ps: saw this on MSNBC: Regardless of numbers, it feels like a recession

Anyway here's the weekly update and as expected, more money is taken out of the equity markets!

And the money taken out since 28th April 2010 is really, really staggering!

Yes, some USD53.279 BILLION has been taken out from long term equity mutual funds!

USD 53.279 Billion yo!

That's 16th consecutive weeks of outflows!

Heck, the Americans do not care if their equity market is raising or sinking, they just want out! (Yeah.. stock chart not required! :P )

Yes, Main Street is telling Wall Street that their equity markets sucks!

They want out!

And Wall Street better start worrying. As stated before investment bankers are seeing layoffs! ( see Barclays Layoffs: The First of Many Axes to Fall?, then Credit Suisse Follows Barclays in Layoffs. )

This is not a shocker. If their customers continues to withdraw at this place, for whom does the investment banker work for?

And here's one interesting posting: If Wall Street Starts Layoffs, Everyone Should Worry


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