May 12, 2012 – Investors Run for the Exits: The financial world is dominated by two R words: repression and revulsion. The pair help explain the continued shunning of equities in favor of fixed-income investments that yield next to nothing—and less than inflation. Pictured above, FED Chairman Ben Bernanke.
So why is the broad swath of investors fleeing attractively valued stocks when the alternatives are bonds with paltry yields and cash returning nil—and both not keeping pace with inflation? After all, during the 1970s, when stocks were in disgrace, there was this hot, new thing—money-market funds yielding into double digits with no risk (or so it seemed for over three decades.)
Another writer says he’s tired of seeing his stocks getting battered when videos of riots in Athens are seen for the 150th time. Managements of companies who are honest about the uncertainty of their companies outlooks see their stocks hammered. No wonder that average individual investors are more concerned about holding onto what they have, leading them to settle for low-yielding fixed-income investments, than growth.
If you’re in stocks, you’ve got a ticket on the Titanic. If you’re in bonds you’re a canary in a coal mine and the methane just started to leak. So where should you be? That, dear reader, is a story for another day.
Clearly, the current administration will do anything to get re-elected. Government statistics are so far from the truth that a six-year-old can tell they’re lying. The major stock indices, like the S&P 500, are heading for an ugly fall – as the world contraction (read bust) continues. Don’t get stuck without a chair when the music stops. Click the link to follow the complete story.
The Master of Disaster