Tags: Small | Investors | Rethink | Stocks

Small Investors Rethink Stocks After Wild Ride

By Michelle Smith   |   Monday, 15 Aug 2011 09:06 AM

The stock market is a game of ups and downs, of gains and losses — that is simply the way the machine operates. However, a New York Times article reports that a lot of small investors are beginning to assess their position in the game.

The term “investor” often causes an individual to think of a heavyweight like Warren Buffett. But “small investors provide the bedrock for the United States stock market through their mutual funds, 401(k) plans and other company-sponsored retirement programs,” says the New York Times.

The recent surge in gold investments that pushed the metal above $1,800 an ounce displays how serious people are about protecting their money.

NYSE traders
(Getty Images photo)
One investor who removed his entire $500,000 retirement fund from equities and put it into US Treasurys told the New York Times, “I’m into asset preservation rather than growth.”

The financial crisis of 2008 resulted in phenomenal losses for investors and it prompted a lot of people to pull their money out of the stock market.

However, “earlier this year, having missed out on last year’s gains, some investors began to tiptoe back in,” says the New York Times, but, “the timing for those people was off, and now they are being buffeted by the steep drops on Wall Street or bailing altogether.”

“After years of underperformance or losses, some investors are questioning whether the long-term outlook that has been drilled into them by Wall Street financial advisers and professionals is really the best advice,” the New York Times reports.

It’s not all fear and selling among small equity investors, however. Stocks rose late in the week.

Bloomberg reported that almost 18 billion shares changed hands Monday.

For some small investors, this is prime stock shopping time.

One individual told the Los Angeles Times, “it's kind of scary, but on the flip side of that I'm optimistic it might create some buying opportunities for the small-time investor like myself. I'm looking real hard at GE, I like the dividend, and it's down pretty significantly today.”

Another, who is employed as a business appraiser at Price Waterhouse Cooper, told the paper, “Hopefully, saner heads will prevail, and people will realize that the longer outlook is reasonable. ... You invest for the long term and not the short term."

If people do allow fear or disenchantment with the stock market to lead them elsewhere, they may be sorry. The New York Times says investment professionals continue to warn that many of those options that are being sought for safety or preservation, like the 10-year Treasury note that yields around 2.3 percent is not going to be enough to fund most people’s retirement.

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