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At this point there’s so much talk about the “Great Rotation!” and “Stocks!” that an article like this one, by E.S. Browning at WSJ on the mood at investment clubs seems out of place, but very useful.Whereas Barron’s is proclaiming that stocks will head to new highs, members of various investment clubs throughout the country are getting discouraged.
At the Old Bay Investment Club near Baltimore, four members quit last year. In northern New Jersey, investment-club devotee Tony Maiello used to draw 15 curious people a month to recruitment meetings. Several recent meetings attracted no new faces at all.
“It used to be that if you went by the numbers, you could pick a pretty good stock, but that isn’t as true anymore,” says William Pearce, president of the Maryland club. “When the market takes a hit, even the good stocks take a hit.”
Despite the fact that stocks have been in a bull market for nearly four years now (it’s been that long) investors are still feeling burnt, and scared of downside.
One head of a stock investing club quotes members as saying that buy-and-hold investing seems like a myth to people now… again, even as stocks have recovered nicely from the crash.
Meanwhile, Josh Brown has a great post up on how the average investor thinks about the market these days.
Basically, the sense of euphoria and over-enthusiasm felt by many who watch the market day-to-day isn’t nearly as intense once you step out of that circle. People still feel burnt and crushed.
Some of his points:
The public is beginning to find out but they are mostly clueless as to what’s been happening for the past few years. Clueless by design, they’ve chosen to allow the markets to exist without their active or knowing participation – even those with ongoing 401(k) contributions. And they are hardly confident in their decision to dip a toe in – flows are gravitating toward US large cap value, emerging markets indexes and dividend vehicles, hardly the stuff of reckless speculation.
We know that the newspapers are all very resource-constrained and that they rely heavily on wire service and AP coverage in general – but if this market move were truly happening in the context of a popular mania or some such grand gold rush, you’d better believe there would be original coverage by actual reporters. Think about housing euphoria or the stock market mania of 15 years ago.
And so , yes, there is curiosity about stocks once again, there is interest. But there is also dubiousness, apprehension, suspicion and leeriness.
Because that would be early.
Bottom line, yes, the Animal Spirits are in the air again. Bigger picture, the idea of widespread euphoria, the type that should scare you, is nonsense.
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