After months and months of shifting from equities into bonds, investors have been pouring cash back into stock funds (we went over some data yesterday).
Now, obviously there’s the angle of the “dumb money” always being behind the curve, and jumping onto an equity rally in its late stages.
But there’s also a desperation angle to it. This WSJ piece paints some pretty grim statistics about the lack of savings of the Boomer generation. Long story short, the majority of Boomers have less than they need to retire, and are making life changing decisions (moving to smaller homes, putting off travel, etc.) to compensate.
Naturally, the piece is long on depressing anecdotes about those who are discovering that they’re unable to retire when they’d hoped.
So with stocks booming again, and savings plans coming up short… it stands to reason that investors would once again flock to the hot market.
And the same phenomenon is driving the record rally in high yield (chart of a high-yield/junk ETF below). With interest rates near zero, and an incredible demand for anything that will make money, it’s no surprise to see all time highs for high-yield investments.