More Than Just Skint

In spite of the relentless cheerleading by Wall Street "strategists" and other alleged experts, many Americans have refused to play along with the "it's a bull market" song. A chart at Zero Hedge, which has for some time been chronicling the exodus by small investors from the U.S. equity market, reveals in colorful detail just how disinterested they have been:

An article in the New York Post, "No-Confidence Vote: Main Street Shunning Markets," offers a few explanations as to why individuals have been unwilling to jump on the train, including the fact that so many are, as the British slang expression goes, skint:

“I think most people are taking money out of these funds because they either need the money to live — because they’re out of work or underemployed — or they’re supporting their kids, who are out of college and not getting jobs,” Mogavero said. “There is also a fear factor about the economy that is causing them to keep money in the bank and out of the markets.”

Still, given my inherent cynicism  -- yes, it's true -- I can't help but think that the view espoused by an Instapundit reader, who is apparently a professional money manager, ironically enough, represents a more accurate assessment of what's been going on:

Professional financial market activity is also way down these days. The drop in volumes is damning. The Fed’s financial repression – forcing market yields below inflation – is one reason. The tsunami of administration diktats is another. And the Chinese-style theft of customer account capital by John Corzine and JP Morgan is the last nail in the coffin. The economics of investing make little sense, and even if you can thread the needle of profitability, you risk having your property seized by regime buddies. Why do anything with your money but stash it under the mattress, or try to get it offshore?”

Comments

[robert in london]

With every passing day there are fewer believers in the ponzi scam that masquerades as a financial market. My exit was the 'bottom' last October when I got rid of a whole bunch of stale (aka money losing) short positions. Never again. And the long side? The criteria I have now set are so Benjamin Graham rigorous that I expect to be dead long before they are met.

The only winning move is not to play.

[sharonsj]

There are two reasons for this:

1. Can't invest in the market if you're broke...

2. Won't invest in the stock market, since it's a gambling casino, and losing it in Vegas is more fun....

[The money belongs under the mattress]

SEC Emerges From Carbonite Deep Freeze, Sues Egan-Jones

Just in case one is wondering what is a greater crime in America: vaporizing $1.5 billion in client money or having the temerity to downgrade the US (twice), JP Morgan and Morgan Stanley, here is the SEC with the answer:

SEC SUES EGAN-JONES, SEAN EGAN ON ALLEGED MISREPRESENTATIONS

Somewhere Jon Corzine is cackling like a mad cow.

http://www.zerohedge.com/news/sec-emerges-carbonite-deep-freeze-sues-sec?

The only guy that does honest analysis and look what happens to him...its like going after Maguire...our regulators are the keystone cops!

[Rocky]

Mattress: The regulators want to make sure that you fill out all the boxes correctly, pay your fees and file the forms. Do you think the clerks at the SEC are any smarter than the ones at your local DMV?