"I'd much rather play the ponies than the stock market. At least at the track you're not betting against the house."
Barry over at The Big Picture posts about an ominous article he spotted in the Personal section of the Wall Street Journal titled "Individual Investors Shift Assets to Stocks". He quotes the article on the massive inflows of money to discount brokers and retail mutual funds, and then asks the money question:
"Are retail investors more likely to "pile into" equities at the very beginning of a Bull Market, or at the tail end of a Bull Market?"The answer historically has been that retail investors jump into the market right as it is about to tank. Barry's post has plenty of data showing how retail investors take over the market just before it reverses (on both the up and down trend). Add this information to Paul Desmond's technical discussion mentioned in previous posts, and it makes the likelihood of an imminent bear market rise dramatically. Somebody's got to be on the selling end of all those retail stock purchases; who do you suppose it is?
I was in New York City on Black Monday in 1987. On the evening news a camera crew went into a tavern frequented by Wall Streeters to get their reactions. Most of them shook their heads sadly and lamented about what a tragedy it was. But one extremely inebriated fellow opined: "Win lose or draw, Filch, Pilfer and Snatch [not real firm name] always gets a commission." I hoped for his sake that his boss wasn't watching.
Anybody seen the Daily Racing Form?
posted by Mike at 10:52 AM