In conjunction with its “Man vs. Machine” special, CNBC released a survey today that showed widespread discontent among investors in the stock market.
Investors are dissatisfied with the exchanges, regulators, robot traders, and more.
Basically, as we’ve been writing about for a long time, equities are boring and dead. There’s no excitement or enthusiasm for them.
And we think that might last for a while, unlike when in 1979 BusinessWeek’s “Death Of Equities” cover augured the beginning of a gigantic bull market three years later.
Following the Flash Crash in early May, if nothing else, you could at least believe that the structure of the exchanges was sound.
But all that went out of the toilet, and amid a stunning (but brief) collapse in prices, some of the biggest, blue-chip NYSE names (like Proctor & Gamble) basically went to 0, a situation that shouldn't have occurred.
Volume dried up rapidly after that.
Madoff, porn, and Allen Stanford... all of these represent major failings by the SEC. And although the agency has talked a good game about reform, there's been nothing substantive that would make your average investor think it was real.
In today's CNBC poll, investors showed a massive loss of confidence in regulators.
Why pay out the nose for some mutual fund manager to pretend to pick stocks for you?
Many investors have learned that it's far cheaper to just buy the whole market (or an index) via an ETF. As such, ETFs constitute the lion's share of market volume now. This of course causes correlations to rise dramatically.
Whether it's true or not, investors obviously fear that robots are taking away all of their profit opportunities.
Baby boomers are terrified for their retirements. The last thing they want is to lose their cash in another market crash. So they're going to fixed-income (which now has the added bonus of offering some capital appreciation, with the way bonds are moving these days).
Besides, with the government having intervened so aggressively in the market, all the action is at the government level. There's no risk in the private sector anymore -- which is why you have to go to currencies, bonds, and commodity futures to get any volatility. Everyone's a global macro trader now!
According to The Treasury market, there's no growth coming anytime soon.
Hopefully we get something like that this time.
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