Europe Fears, Volatility, And High-Frequency Trading Is Causing mum & Pop To Hate Stocks

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The small investor has had it with the stock market.

That’s the line from the WSJ citing accelerating mutual fund outflows as evidence that the “little guy” is disgusted with equities to a degree that’s rarely been seen in history.

While the data is compelling — the straight years of outflows, which have really gathered steam of late — what are more interesting here are the anecdotes for why.

“I feel like the tail of the dog that is being wagged by institutional investors who are taking a lot of risk, playing a lot of games and just have these computerized orders that affect me a lot,” says Simeon Thibeaux, a semi-retired businessman from Alexandria, La.

Whether that’s a true characterization or not, it’s obvious that the hype over high-frequency or algorithmic trading has clearly had an impact — an arguably a good one if it means small investors don’t feel they can “beat” the market.

What else has them spooked? Well, the financial crisis for one, and now the European sovereign debt crisis:

The last straw was the May market volatility, accompanied by widespread fears about European government debt. On May 20, the Potyks asked their financial adviser to sell the last of their stock mutual funds.

Now that their portfolio consists entirely of fixed-income investments, “I won’t make 8% on my money. I will make 4% or 5%, but the money will be there,” says Mr. Potyk.

Read the whole thing at WSJ >

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