Do We Now Have a Confirmation of a Bubble in Stocks?
Following up on yesterday's comments, we now add one more possible pin to prick the bubble building in the stock market: apparently, individual investors - the so-called "retail investor" - is finally piling in to the stock market.
Of course, you probably won't see the inevitable drop to come right off the bat. The pros have a way of holding off, letting the retail investor drive prices up for a while, until there's enough profit to take off the table over a period of time that doesn't reveal exactly what's going on, unless you know where to look. Naturally, the individual hasn't a clue where to look and hasn't studied the cyclical action of the stock market enough to know that he or she is essentially walking into a trap.
It's happened in the past, it will happen again in the future, and it may be happening now.
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Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg...Such is usually true in the last leg of any bull market. The retail investor - holding off in this case since the bull market began in 2009, finally loses his or her fear, a fear fostered by massive losses in 2008, and having witnessed the rise in stock prices, decides it's time to cast fear aside and join the party. And if the numbers revealed in the Bloomberg data hold true, we can now expect those late entrants to be thoroughly - and in some cases tragically - fleeced by the pros, who typically watch for this sort of action and lick their chops.
Of course, you probably won't see the inevitable drop to come right off the bat. The pros have a way of holding off, letting the retail investor drive prices up for a while, until there's enough profit to take off the table over a period of time that doesn't reveal exactly what's going on, unless you know where to look. Naturally, the individual hasn't a clue where to look and hasn't studied the cyclical action of the stock market enough to know that he or she is essentially walking into a trap.
It's happened in the past, it will happen again in the future, and it may be happening now.
More...
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