Exit from Stocks WSJ

TT · Post by TT » Fri Oct 05, 2012 5:20 am

Viewing and researching past performance of stocks is not of value IMO as changes in how Wall Street operates
I have been a part of this departure steadily over time.

http://finance.yahoo.com/news/despite-g ... 25z;_ylv=3

RooseveltG · Post by **RooseveltG** » Fri Oct 05, 2012 6:35 am

If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Also, this would seem bullish for long term investors.

Roosevelt.

dickenjb · Post by **dickenjb** » Fri Oct 05, 2012 6:43 am

Interesting but I am staying the course.

If you read the article you will see that the last few times the public gave up on stocks were all good times to do the opposite. IOW they all sold after big crashes or long steady declines - called shutting the barn door after the horse has left.

dickenjb · Post by **dickenjb** » Fri Oct 05, 2012 6:45 am

RooseveltG wrote:If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Also, this would seem bullish for long term investors.

Roosevelt.

Because the smart money is buying.

I agree, bullish for long term investors. Sell when your shoe shine boy gives you stock tips. Buy when Ma & Pa Kettle head for the exits. Or just pick an appropriate AA and ignore the noise. HFT and Greece is noise. It is not different this time.

Sidney · Post by **Sidney** » Fri Oct 05, 2012 7:22 am

dickenjb wrote: agree, bullish for long term investors. Sell when your shoe shine boy gives you stock tips. Buy when Ma & Pa Kettle head for the exits.

Yes, fleeing is good.

john94549 · Post by **john94549** » Fri Oct 05, 2012 7:34 am

Pick a month, any month will do. February works for me. Re-balance then. With your "real money".

As for your "play money" (aka "trading account"), buy/sell at leisure. It's all about keeping score, is it not?

And yes, swimming against the tide, I sold yesterday (in my trading account). Harvesting some gains, think October-Fest.

Swimming even harder against the tide, not only did I sell some long, I bought more short.

Oh, well.

Leesbro63 · Post by **Leesbro63** » Fri Oct 05, 2012 7:57 am

I agree with the people in the article that nothing is safe. But the older guys who are market timing will be lucky not to underperform at best and get burned at worst

Call_Me_Op · Post by **Call_Me_Op** » Fri Oct 05, 2012 7:57 am

TT wrote:Viewing and researching past performance of stocks is not of value IMO as changes in how Wall Street operates
I have been a part of this departure steadily over time.

http://finance.yahoo.com/news/despite-g ... 25z;_ylv=3

This encourages me to buy more stock.

RenoJay · Post by **RenoJay** » Fri Oct 05, 2012 8:02 am

I read this article on Yahoo news. I reviewed the comments underneath the article, and the vast majority seemed to believe "Wall St. is rigged" and other conspiracy theories. It's not wonder so many people are broke.

Tim_in_GA · Post by **Tim_in_GA** » Fri Oct 05, 2012 8:11 am

RenoJay wrote:I read this article on Yahoo news. I reviewed the comments underneath the article, and the vast majority seemed to believe "Wall St. is rigged" and other conspiracy theories. It's not wonder so many people are broke.

Yeah, the comments on Yahoo Finance articles are a major source of entertainment for me each day.

RenoJay · Post by **RenoJay** » Fri Oct 05, 2012 9:48 am

Tim_in_GA wrote:
RenoJay wrote:I read this article on Yahoo news. I reviewed the comments underneath the article, and the vast majority seemed to believe "Wall St. is rigged" and other conspiracy theories. It's not wonder so many people are broke.
Yeah, the comments on Yahoo Finance articles are a major source of entertainment for me each day.

Personally, when I get in a mood to rant without a point in a way that would be inappropriate for Facebook or Bogleheads, I go to Yahoo and leave comments.

zaboomafoozarg · Post by **zaboomafoozarg** » Fri Oct 05, 2012 10:07 am

"Only a quarter of households with retirement plans were willing to take above-average investment risk in 2011, down from 33% in 1998, an ICI survey found."

I wonder how they even quantified "above-average risk".

yukonjack · Post by **yukonjack** » Fri Oct 05, 2012 10:17 am

I wonder how much of this "concern" has to do with the S & P being at a 5 year high and people believing it's time for a correction. I have to agree with most on this forum that it is probably more of a sign to buy or at least stay the course. Reading articles like that mark me appreciate the Bogleheads even more.

jes58 · Post by **jes58** » Fri Oct 05, 2012 10:27 am

This surely demonstrates the importance of creating a plan that provides the emotional and technical framework in which to treat all this as noise and stay the course. Scary how many people have not done so.

Rodc · Post by **Rodc** » Fri Oct 05, 2012 10:49 am

zaboomafoozarg wrote:"Only a quarter of households with retirement plans were willing to take above-average investment risk in 2011, down from 33% in 1998, an ICI survey found."

I wonder how they even quantified "above-average risk".

At least they did not say only a quarter of households with retirement plans were willing to take above median risk...

trico · Post by **trico** » Fri Oct 05, 2012 11:09 am

The stock market has been up and down ever sense it inception, and knowing when that happens has been impossible to time. I used to subscribe to the market timing theory, in that the professionals with computer programs could figure out when the market was going to go down and then sell your stocks. This was thru Merriman Financial Services, and I can tell you it did not work. Its kind of like picking who is going to win an NFL game, if you could pick all the winners and never lost a game, you would be a instant millionaire. But this is called gambling, so you may as well go to the casino, and at least have free drinks so you can see you hard earned money evaporate. so good luck my friends, trying to predict where the market is going is a losers game won by the house.

letsgobobby · Post by **letsgobobby** » Fri Oct 05, 2012 3:57 pm

jes58 wrote:This surely demonstrates the importance of creating a plan that provides the emotional and technical framework in which to treat all this as noise and stay the course. Scary how many people have not done so.

The great majority of people are not capable of this kind of emotionless, long term planning. Those of us who can will always far outperform the masses.

rustymutt · Post by **rustymutt** » Fri Oct 05, 2012 3:59 pm

Reminds me of a greased pig contest at a county fair.

VennData · Post by **VennData** » Fri Oct 05, 2012 5:24 pm

RooseveltG wrote:If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Good point. But because it's simply a faulty assumption. If someone sells a stock to someone else, no money has "left" the market. The same amount of real, cash money that "left" also "came in."

It's part of this fear and paranoia for American nonsense of certain media types.

john94549 · Post by **john94549** » Fri Oct 05, 2012 5:35 pm

Folks buy, folks sell. It's the market.

gnosis · Post by **gnosis** » Fri Oct 05, 2012 6:06 pm

I just hit my 5/25 rebalancing band today, so I moved 5% stocks into bonds. It was a true test of my discipline to "ignore the noise, follow your IPS". I passed the test! I must admit though I did spend about 30 minutes hesitating, stewing in my emotions, trying to imagine where stocks will go next, and looking at S&P 500 graph YTD before I pulled the trigger. I had remorse for about 2 hours afterward.

Easy Rhino · Post by **Easy Rhino** » Fri Oct 05, 2012 6:46 pm

gnosis wrote:I had remorse for about 2 hours afterward.

I usually just eat ice cream before rebalancing, that way I trade on a sugar high and don't feel any remorse.

The article mentioned inflows into international stocks, has that passed the $168 billion withdrawn from (domestic) stock funds?

dmcmahon · Post by **dmcmahon** » Sat Oct 06, 2012 12:18 am

I am suspicious that those MF outflow stats don't include ETF inflows. Moreover, funds have (per an article I can't find right now) been flowing into target-date funds which invest partially in stocks. I would also want to know about pension funds and other ways in which the "average Joe" is investing indirectly in stocks.

thebogledude · Post by **thebogledude** » Sat Oct 06, 2012 12:54 am

in the past, like ten years ago, if stocks were up, then bonds were down and vice versa, but then interest rates weren't as low as they are now. Nowadays, both bonds and stocks are overpriced. If interest rates go up and bond prices go down, you can have a negative return in bonds.

jidina80 · Post by **jidina80** » Sat Oct 06, 2012 1:03 am

The economy is clearing recovering in terms of unemployment and the purchasing/input end of the supply chain. The 'smart money' is investing in stocks. Good times ahead, the money says.

That said, I maintain a relatively static allocation between equity and debt and suggest almost everyone do the same. The future of equity values is really, really, hard to predict

.

livesoft · Post by **livesoft** » Sat Oct 06, 2012 1:46 am

Not enough gloom and doom in this thread. What's up with that?

BC_Doc · Post by **BC_Doc** » Sat Oct 06, 2012 2:25 am

"The Death of Equities" article crossed my mind as I was reading this story last night. It makes me think this secular bear market is getting long in the tooth.

Edit: cyclical replaced with secular.

dickenjb · Post by **dickenjb** » Sat Oct 06, 2012 7:34 am

BC_Doc wrote:"The Death of Equities" article crossed my mind as I was reading this story last night. It makes me think this cyclical bear market is getting long in the tooth.

You mean secular bear, right? Because we are in a cyclical bull market now.

PacNorWest · Post by **PacNorWest** » Sat Oct 06, 2012 8:04 am

If stocks hit a high water mark, why would you not take 5-percent off the table?
You know the tide will go out again, don't you?

Is patience an emotion?

Sidney · Post by **Sidney** » Sat Oct 06, 2012 8:06 am

PacNorWest wrote:If stocks hit a high water mark, why would you not take 5-percent off the table?
You know the tide will go out again, don't you?

Is patience an emotion?

how do you know what the high water mark is?

livesoft · Post by **livesoft** » Sat Oct 06, 2012 8:40 am

PacNorWest wrote:If stocks hit a high water mark, why would you not take 5-percent off the table?

Uh, because stocks always have gone higher than all previous high water marks? That's something one can write with certainty.

YDNAL · Post by **YDNAL** » Sat Oct 06, 2012 9:02 am

Sidney wrote:
PacNorWest wrote:If stocks hit a high water mark, why would you not take 5-percent off the table?
You know the tide will go out again, don't you?

Is patience an emotion?
how do you know what the high water mark is?

livesoft wrote:Uh, because stocks always have gone higher than all previous high water marks? That's something one can write with certainty.

No specific knowledge here of a high water mark, but do have historical indications where "a flood line" might be - that is, when the water spills over the wall [street].

PacNorWest · Post by **PacNorWest** » Sat Oct 06, 2012 9:47 am

YDNAL wrote: No specific knowledge here of a high water mark, but do have historical indications where "a flood line" might be - that is, when the water spills over the wall [street].

Very nice, thank you.
It helped me find this parallel explanation: http://www.advisorperspectives.com/dsho ... uation.php
Yours is a very helpful answer.

rec7 · Post by **rec7** » Sat Oct 06, 2012 9:52 am

RooseveltG wrote:If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Also, this would seem bullish for long term investors.

Roosevelt.

I think like you but I don't understand how stocks are going up with 90% of new money going into bonds. The only thing I can think of is government money going into the market is not printed.

ofcmetz · Post by **ofcmetz** » Sat Oct 06, 2012 11:28 am

rec7 wrote:
RooseveltG wrote:If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Also, this would seem bullish for long term investors.

Roosevelt.
I think like you but I don't understand how stocks are going up with 90% of new money going into bonds. The only thing I can think of is government money going into the market is not printed.

90% of small investors maybe, but not the real money like pensions and what not. Aren't prices set on the edges, as not all stocks are sold every day. There have been buyers willing to pay more and more day by day. These buyers include me.

Trading on hunches and feelings is like thinking you can guess the next roulette color.

BC_Doc · Post by **BC_Doc** » Sat Oct 06, 2012 12:36 pm

dickenjb wrote:
BC_Doc wrote:"The Death of Equities" article crossed my mind as I was reading this story last night. It makes me think this cyclical bear market is getting long in the tooth.
You mean secular bear, right? Because we are in a cyclical bull market now.

Whoops! Yes, thanks-- I definitely meant secular bear. Thanks for catching my error.

BC Doc

rec7 · Post by **rec7** » Sat Oct 06, 2012 4:37 pm

ofcmetz wrote:
rec7 wrote:
RooseveltG wrote:If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Also, this would seem bullish for long term investors.

Roosevelt.
I think like you but I don't understand how stocks are going up with 90% of new money going into bonds. The only thing I can think of is government money going into the market is not printed.

90% of small investors maybe, but not the real money like pensions and what not. Aren't prices set on the edges, as not all stocks are sold every day. There have been buyers willing to pay more and more day by day. These buyers include me.

Trading on hunches and feelings is like thinking you can guess the next roulette color.

Take a look at this http://www.lipperusfundflows.com/#creat ... _trial.php
do you call that small investors?

ofcmetz · Post by **ofcmetz** » Sat Oct 06, 2012 4:59 pm

rec7 wrote:
ofcmetz wrote:
rec7 wrote:
RooseveltG wrote:If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Also, this would seem bullish for long term investors.

Roosevelt.
I think like you but I don't understand how stocks are going up with 90% of new money going into bonds. The only thing I can think of is government money going into the market is not printed.

90% of small investors maybe, but not the real money like pensions and what not. Aren't prices set on the edges, as not all stocks are sold every day. There have been buyers willing to pay more and more day by day. These buyers include me.

Trading on hunches and feelings is like thinking you can guess the next roulette color.
Take a look at this http://www.lipperusfundflows.com/#creat ... _trial.php
do you call that small investors?

It didn't show the amount per investor. The WSJ, article only references mutual fund and ETF fund flows. Couldn't these massive numbers be an aggregate of the minions of individual investors and not the giant pension funds and endowments? I freely admit that I'm no expert and was just speculating. It's possible that they have stuck to their asset allocations and are not timing like the investors mentioned in the article.

rec7 · Post by **rec7** » Sat Oct 06, 2012 5:13 pm

I am no expert but that is a lot of money running away from the market.

Phineas J. Whoopee · Post by **Phineas J. Whoopee** » Sun Oct 07, 2012 6:49 pm

ofcmetz wrote:
rec7 wrote:
ofcmetz wrote:
rec7 wrote:
RooseveltG wrote:If so much money has been leaving the market, why have stocks gone up in price? Less supply?

Also, this would seem bullish for long term investors.

Roosevelt.
I think like you but I don't understand how stocks are going up with 90% of new money going into bonds. The only thing I can think of is government money going into the market is not printed.

90% of small investors maybe, but not the real money like pensions and what not. Aren't prices set on the edges, as not all stocks are sold every day. There have been buyers willing to pay more and more day by day. These buyers include me.

Trading on hunches and feelings is like thinking you can guess the next roulette color.
Take a look at this http://www.lipperusfundflows.com/#creat ... _trial.php
do you call that small investors?
It didn't show the amount per investor. The WSJ, article only references mutual fund and ETF fund flows. Couldn't these massive numbers be an aggregate of the minions of individual investors and not the giant pension funds and endowments? I freely admit that I'm no expert and was just speculating. It's possible that they have stuck to their asset allocations and are not timing like the investors mentioned in the article.

Hi ofcmetz,

You are exactly correct. If I may quote from the article:

... Even as stock indexes have doubled in value since the market low in March 2009, investors have yanked a net $138 billion from mutual funds and exchange-traded funds that invest in U.S. stocks, according to the Investment Company Institute, a mutual-fund trade group. ...

(Emphasis added)

Mutual Funds + ETFs are not equal to the entire universe of US stock market investors. There are others, including institutions and individuals, some domiciled domestically, some foreign. I tried a quick Google search but was not able to find the size of the slice of US stock markets held by mutual funds and ETFs.

As others have noted, how could money leave or enter the secondary market? Nobody can sell without a buyer. Nobody can buy without a seller.

To its credit, the article is talking about cash flows (money in its medium of exchange and store of value functions), not changes in the overall value of the market (money in its unit of account function). It gives no indication that there is a problem with stocks, just that mutual fund and ETF investors have been pulling out more than they have put in from March 2009 to last Thursday.

Also to its credit is the non-misleading headline: "Despite Gains, Many Flee Stock Market."

To me the article appears to be about sociology rather than investing.

PJW