stocks x bonds

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robertts12
Posts: 463
Joined: Wed May 30, 2007 5:07 pm

stocks x bonds

Post by robertts12 »

The most U.S. investors think that the stock market will continue to improve but don't want to buy stocks. That's the conclusion of to inquiries, polls (by Franklin Templeton and bankrate.com).
According bankrate.com, 76% of the investors prefere fixed rate investments, despite the real negative interests. Specialists think that that is consequence of the 2008 crisis.
For me, the fact that investors refuse to invest in stocks nowadays, is a sign that the stock market will continue to improve and the bond market is more dangerous.
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nedsaid
Posts: 19275
Joined: Fri Nov 23, 2012 11:33 am

Re: stocks x bonds

Post by nedsaid »

Keep in mind what is important is what people actually do and not what they say. There are people that sound very pessimistic and yet still own stocks.

What you are doing is some contrarian thinking, which for an investor is a good thing. You are right in saying that pessimism about the stock market is a good thing for stocks.

This is an oversimplification, but big picture bull markets end when stocks run out of buyers. As long as there are a lot of pessimists out there, you have a large group of people that could at some point turn optimistic and buy stocks. When market sentiment gets to be euphoric what happens is that everyone that is going to buy has bought. The market runs out of new buyers to drive prices higher.

So the fact that there is a lot of pessimism about stocks bodes well for the market. The bond market has the opposite problem. The broker I have worked with for years no feels there is more risks in bonds than stocks. I don't agree with that statement but I will say that bonds are a whole lot more riskier than they used to be.
A fool and his money are good for business.
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