Loss of Faith in Equities

[benjamen]

While people are finally losing faith in the stock market, they are still not moving into commodities. Oddly, they are moving to bonds?
http://finance.yahoo.com/news/why-i...RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

"The cult of equity is dying," Bill Gross, the founder of Pimco, wrote in his monthly letter last week.

"Here are the numbers today: About $171 billion has flowed out of mutual funds over the last year, according to the Investment Company Institute, which tracks mutual fund data. Where has all that money gone?

Bonds. About $208 billion has flowed into the bond market over the same period, according to numbers from the I.C.I."

"Let me offer a more straightforward explanation of why investors have left the stock market: it has been a losing proposition. An entire generation of investors hasn't made a buck."

 

[pmbug]

Faith? Faith has nothing to do with it. Credit deflation is a bitch.

 

[bushi]

While I agree on that, I also think that as Baby Boomers retire/approach retirement age, they gradually move their financial assets from riskier assets into "most stable" ones - that is but a common investor profile - closer to the retirement, more they are interested in preserving the accumulated wealth rather than risking it for a gain, and it is standard financial practice.

I think it is remarkable demographic, and one that will put big stress on share prices - Baby Boomers as a group have accommodated huge wealth, and it was mostly stored in stocks & their houses, to some degree. Bernanke & successors might need to print a whole lot more dollas, to keep these markets up, from this (inevitable) selling pressure. Because somehow, I cannot see the iPod generation, buying all that inflated stuff at current prices, from their predecessors.

 

[rblong2us]

Yup

been saying this for a while.
There are not enough coming through to buy the accumulated wealth of the Boomers who have had the easy property ride, free education, choice of career and a business environment that was substantially free of red tape, in which to try ideas.

Ok starter homes with a mortgage costing much the same as rental will continue to be taken up but those fancy upmarket mc mansions will struggle to find willing and able buyers.