But, the simple fact is: major moves --and by that I mean up or down trends that last years-- by the market are driven by little old ladies in Cadillacs, by portfolios owned by hair dressers, and postal delivery workers.
Institutional investors are there, they have always been there and always will be. That the institutional investor is sitting in cash (the average seems to be about forty per cent) is of little consequence.
The biggest problem is that safe investments are no longer safe. The list is long and you know the names, GM, Citi, AIG, &c.
When holding Citi Stock is unsafe the un-savvy investor flees. And when the small investors flee en masse they take key billions with them. These are the extra billions that puts the market over the top (or under water).
This is the important thing: If the institutional investors were full invested it would make little difference. Sure, the Dow Jones Industrial Average would probably return to 1999 levels; but, without the return of the little old lady from Pasadena that is all that would be accomplished.
Is it "Chicken before the egg?"
Will the, despite Cramer's best efforts, uneducated investor return? That is the big question. In the 1930s that investor never returned. Till the day they died, my grandparents never bought stock --treasuries were all the risk they could stomach-- they were not alone.
I think they will return. But, and this is a big but, they will not return until they are confident that safe companies are, indeed, safe.
When will this be? Nobody knows. Anyone who says they know is either a liar or suffers (if that is the right word) from self dellusion. It could be as little as two or three years (if Obama gets lucky with his programs) or it could be a generation.
It will happen, it will come back. But it might be a good time to get a government job.
I wonder if the post office is hiring.
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