In Striking Shift, Small Investors Flee Stock Market -- $33 billion from US Stock Markets in 2010

[Elmore Furth]

Nearly two-thirds of Americans believe the economy has yet to hit bottom, a sharply higher percentage than the 53% who felt that way in January according to a recent NBC/WSJ poll. This pessimism is reflected in money bleeding out of the stock markets in the first 7 months of this year.

NBC/WSJ poll shows Americans rejecting "Recovery Summer" meme

Two years ago, 70 percent of the money in 401(k) accounts was invested in stock funds but it now stands at 57 percent. Bonds are seen as less risky.

Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.

Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.

If that pace continues, more money will be pulled out of these mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, when the global financial crisis peaked.

In Striking Shift, Small Investors Flee Stock Market

[Uben]

1. Why don't people trust the stock market?

I can't imagine!






/yes, this is sarcasm

[BrklynLiberal]

2. Tell me again about investing Social Security in the Stock Market and what a great idea it is.

The only ones who will benefit from that are the brokers who will be getting commissions on the accounts.

:silly:

[havocmom]

3. Thus the push to privatize Social Security

Wall Street's con isn't working to keep voluntary investments. They want the US Government to force investments via payroll with-holdings.

[northernlights]

7. seriously...real life story about give'm an inch

I'm a part-time CSR in the mutual fund world. They auto-enrolled us in 401K with "opt-out." Except, the letter they sent said we could opt out at contact info below...followed by half a blank page.

At the bottom of the page in 4 point font was 2 lines of type -- where you'd normally find things like copyright, inventory control # for the form, etc. In the midst of that info was an unidentified phone number. Yup. It was the "opt out" contact info. I called to opt out.

It took 20 minutes on the call with me repeating slowly and enunciating V E R Y C L E A R L Y that I intended to opt out before that rep caved and actually opted me out. That was 20 minutes of me realizing from the get-go that I was at war...and wih 9 months experience as a CSR. I set him up and then beat him to the punch...left him practically crying as he realized that we would both be working until we dropped at CSR salary level.

A couple months letter, our VP sent around an email regarding year-end bonuses. In it was one sentence that popped out: For those of us who had "opted out" they intended to set up 401K accounts and deposit the funds into those.

This time there was no opt out. A couple weeks ago I got a confirmation statement advising that I now have a 401K set up. It is held with one of my employer's clients, in the most fee-intensive type of mutual fund out there (a crappy life-cycle fund), so my employer gets fees from it too. I tried to close it -- they refused. I've been on a tear ever since, since my identity was already completely stolen once thanks to Fidelity's mismanagement of our HP pension.

How big a jump do you think it will be from "opt out" to "attaching our wages and forcing" us to prop up their casino. :grr: :grr: :grr:

I'm thinking, once I quit this hellish nightmare of a job, of filing an identity theft complaint against my employer, their client, and the middle man with the FBI and FTC, with copy to SEC.

[customerserviceguy]

11. Sounds like you need to find a more ethical fund to work for

If they're screwing over the employees (who are in a position to know how much they're being screwed), I would imagine that they are really messing over their customers. Eventually, this will come back to bite you in the ass, good luck in being able to make a move to someone else whose name won't be leading the evening news someday soon...

[havocmom]

12. :snarf:

good joke.

All sorts of businesses are screwing employees via 401K pressure and hi-jinks.

[customerserviceguy]

14. Mine's not

I'm trying as hard as hell to convince a fellow co-worker who just went from part time to full time, like I did, to stick 6% of his wages in the company 401K, so he can max out on the 50% match. Even if he leaves it in a money market fund like I do, that's still a 50% return on investment.

[northernlights]

16. it's not your business

what your co-worker chooses to do with his money, where or how he chooses to invest it.

Pardon me for butting in here, but who the hell are you to try "as hard as hell" -- or try at all -- to convince a co-worker what to do with what is, after all, HIS money.:wtf: :wtf: :wtf: :wtf: :wtf:

Whatever you may *think* you know about "your friend" or about investing, the reality is you *don't* know what his situation is. You only know what he chooses to tell you it is. Which could be a pack of lies because frankly it's NOT YOUR BUSINESS.

Maybe, just MAYBE, he believes (as I do) that the stock market is totally rigged to favor one set of people at the expense of another set of people. And now that I'm working "on the inside" I have *no doubt* about the "game."

Maybe, just MAYBE, he's living (as I am right now) hand-to-mouth, and can't afford to "invest" HIS
MONEY in TPTB.

Maybe, just MAYBE, he prefers to (as I do) invest his money elsewhere.

Maybe, just MAYBE, he believes (as I do) that the market is going to crash again. That it's not going to recover anytime soon. And HIS investment, all of it, will be out of reach right when he most desperately needs it.

Yeah, everybody, and I do mean EVERYBODY, went on and on about how great 401Ks were back when I had my career. THANK FYUCKING GOD I IGNORED THEM and stuck my savings in CDs. I may have lost those savings, but I lost them to staying alive and healthy during the last 10 years of mostly unemployment. If I'd been in a 401K, I would have lost my home and probably my health while fighting to get MY MONEY back when I desperately needed it.

You would believe how many IRATE PEOPLE I hear from every night trying to get what's left of their money back while they try to stay afloat through this "recovery."

Quite frankly I will never, NEVER "invest" in 401Ks or TPTB. I don't care what "matching" they do...it's a shell game and eventually, one way or another, THEY GET "their gift" back, along with YOUR MONEY.

[customerserviceguy]

25. Actually, he has asked me for financial advice on a number of topics

and he respects the fact that I used to be an enrolled agent who had his own tax practice. Also, I'm certainly not trying to talk him into the stock market, I just want to see the guy go from living paycheck-to-paycheck to having a little bit stashed aside for emergencies.

He's borrowed small sums from me, always paying them back, so I'm trying to get him to use his rise in pay from going from 30 hours a week to 40 hours to make him feel like he doesn't have to do that any more.

He's got a fourteen year head start on me on saving for retirement, and that time can be put to good use to build up for the future.

Your hate of the markets doesn't give anybody an excuse to piss away every dollar, leaving themselves vulnerable to sudden shifts of fortune.

[sendero]

18. You might not be doing him..

... any favors. While I completely agree with saving for retirement, it is CLEAR AND OBVIOUS that our government's next raiding target is retirements plans, both 401K and IRA. What they are actually going to do is not yet clear, but several trial balloons have already been floated and it is just a matter of time because THAT'S THE LAST CACHE OF CASH THEY HAVE TO RAID.

For the first time since the early 80s, I'm putting nothing into IRAs and 401Ks. I'm seriously considering taking the money out and just taking the hit now.

[customerserviceguy]

26. If the retirement plans are 100% owned by the people who made the money

then they will not be 'raidable' by the government. The only thing the gov't can do is to change the tax rules. At that point, perhaps taking the money and hiding it in a mattress or in gold, or whatever will be the right idea, but at this point in time, getting a 50% match from our company is a good thing.

[sendero]

30. Well....

.. it is not "100% owned" if the government can tell you that you have to invest it here or there. And that is EXACTLY what they are going to do.

[eridani]

24. I agree. If there is a match, it's a good idea to take it, unless--

--there are no conservative investment options. Luckily, my former employer had a Stable Value Fund that never lost any money over its entire history. I got of out stocks in February 2008, and had a net return of 0.5% that year. Beats the bejeezus out of losing a third or more, no?

[customerserviceguy]

27. Our company uses Vanguard for its funds

and there's always a money market fund in just about every group of funds. There are also bond funds, including those that invest in Treasuries, but even those worry me.

I used to do taxes for people, and I never saw an income that couldn't be outspent. I never saw a full-time union wage that couldn't be lived within, either. I really do care about my friend's well-being, and I'd like to see him develop the savings that would free him from a lot of nasty little expenses that people who live from hand to mouth incur.

[eridani]

28. Worry about outspending capital is way down on the list for most people

LOSING it far more of a problem, no?

[customerserviceguy]

29. Losing it is a problem

That's why I avoid the casino. But there's nothing wrong with spending less than you earn, and getting tax-advantage savings that is matched by a solid employer, and put into safe money market funds. You won't get squat for interest until inflation kicks back in, but you won't lose anything, either.

[northernlights]

13. it's not the mutual fund company I support...

it's the transfer agent they outsourced their customer service to. In other words, a lackey to a number of large, often household name, mutual funds. Although the specific fund I support sucks big time -- I wouldn't recommend any of them to be honest.

To me, it's just a harbinger of the things to come. This is probably how they *all* do business.

[customerserviceguy]

15. Perhaps we need a few exposures of this kind of thing

It's how we get legislation (such as the new credit card rules) through Congress.

And I certainly hope that you're wrong about them all doing it.

[northernlights]

17. whether or not I file an identity theft complaint

I will be sending copies of my documentation to a couple key, not yet bought and paid for senators. Definitely won't waste my time on my own senators...

[pscot]

31. Hey. Just like health insurance reform

Gag me with a spoon.

[BeyondGeography]

4. The stock market is being punished for crap performance over time

From the article:

The Dow Jones industrial average started the decade around 11,500 but closed on Friday at 10,213.

It will be many years before people have anything resembling the levels of trust and confidence in the overall market that they once had. Many others (like myself), have permanently left for safer havens.

[snot]

5. Not just bad performance (oops!); also, we've learned the fraudsters control the "police."

[Ineeda]

6. But how much of this trend

reflects the impact of the growth of unemployment. Speaking of my personal situation, I no longer contribute to my small (market-invested) 401k and have had to draw it down for living expenses. Multiplied by thousands, if not millions, of small investors in the same situation results in a very significant amount of divestment.

[northernlights]

8. as a CSR in mutual fund world...

I can tell you I process withdrawals at easily 100:1 ratio to investments.

Many people are stopping investing as they lose jobs. Many are withdrawing and/or closing their accounts altogether to pay off credit card bills once and for all. One middle-aged guy closed a small IRA to meet payroll.

But a few weeks ago I saw many, many, many close accounts -- a dozen in a single part-time evening -- altogether in tight-lipped (out)rage.

Since then, they haven't been tight-lipped but outright abusive to innocent, low-wage processor named moi.

[gristy]

9. This is part of a cycle

We will hear these awful pronouncements for another 6 months or so until the market has been pushed down as far as it can go and the people who drive this narrative are completely invested in stocks. Then we will miraculously "turn this recession around", or so the media and pundits will tell us, and there will be a clamoring for stocks. A virtual stampede to get into stocks. In 6 months or so after the market has increased 20%, the people who drive this narrative will unload their stock and then start the pessimism meme again. It never ends, and the folks who always come out ahead are the people driving the narrative.

[customerserviceguy]

10. Other than my "gambling" money

I keep all my 401K money in money-market funds. The casino's a little too risky for what I might have to retire on someday.

[sendero]

19. With fully 70% of all stock market trading..

... being done by programs, a lot of it, probably most of it, High Frequency Trading, why would anyone put a DIME in the market?

The idea was to invest in companies and share in their success. There is none of that in todays' market. It is a rigged game for the big investment banks to skim yet more money from the middle class.

Even the average dumbass American has figured this out.

[bemildred]

20. The notion that the stock market, or any market, is a good place for your savings is fatuous.

Markets entail risk, sometimes you can lose it all, it happens all the time.

[fasttense]

21. I follow my father's advice

If you can afford to lose the money, then it's safe to put into the stock market.

[txlibdem]

22. K & R 401ks shift from stocks

eom

[Yavin4]

23. Reading This Thread Just Proves That the Financial Advice That People Were Getting Was Flat Wrong

First, you should tailor your spending, saving, and investing around your personal levels of risks, and then you should categorize your risks into short term, mid term, and long term risks.


For example, if you have a ton of credit card debt or a huge student loan, then you have short term credit default risks. You should not be putting money into a 401(K) if you're at high risk for a short term default.

Retirement is a long term risk for most of us, and in order to enjoy retirement, we have to overcome short and mid term negative events like a loss of a job, a divorce, a medical emergency, etc.

Finanical advisors have preached to the masses to elevate long term risks over short and mid term risks. The current economic downturn shows the results of this. People are not financially prepared to handle a severe down turn in the economy, and as a result, they're taking money out of their 401(k) accounts at a big penalty.

[AnneD]

32. Preach brother...

preach:thumbsup:

from a sister that is getting out of debt (totally out next year) and sailing to a better retirement. I am doing the Dave Ramsey thing.