The word is out, just so you know…
- Joshua M Brown
- January 25th, 2013
Just so you know, tonight this Breaking News Alert went to every email box in the country signed up for such alerts with the New York Times:
BREAKING NEWS Friday, January 25, 2013 4:06 PM EST
After millions of people all but abandoned the market following the 2008 bust, individual investors are pouring money into stock mutual funds like they haven’t in years. The flood, fueled by fading economic threats and better news on housing and jobs, has helped propel the broad market to within a few good days of its highest level — ever.The Standard & Poor’s 500-stock index has soared 120 percent since March 2009 and ended trading Friday above 1,500, just 5 percent shy of the record high of 1565.15 hit in 2007. This year alone, the main indexes are up 5 percent. Now, the investing public seems more afraid of missing out than of misreading Wall Street again.
It may sound silly - impossible even - but most people in the United States who don't follow the stock market walk around thinking it's doing badly. This is because they are repeatedly hearing about how bad the economy is and all the Wall Street scandals. They just assume the market sucks. I know that sounds crazy, but ask a few random people on the street, clerks and cashiers and college kids and construction site guys and teachers - you'll be amazed.
Now the knee-jerk response would be to say "Here we go, the dumb money is on the way, it's all over now!" Everyone who thinks they're smart is thinking that exact same thought. Not quite that simple, don't be too clever for your own good. If America is really and truly ready to fall in love with her stock market again - and we don't know for sure that we're there yet - do you want to be the guy who got contrarian at the top of the first inning of something like that?
So yes, the mentality of non-participants is going to change now. The automatic assumption will cease to be that the market is "awful" or "rigged" or "dangerous." These assumptions will be replaced by a rekindled curiosity over how it is that money is being made.
You can't keep a bull market under wraps for long, especially not one headed into Year 5 that actually seems to be picking up momentum if anything. We're off to the best January start in a quarter of a century and since 2009 the asteroid has missed earth a few times. Business has continued and profits have been earned in the meanwhile.
The word is out.
Nathaniel Popper's associated article below:
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.