Tags: Leuthold | generation | investors | funds

Leuthold: US Has Lost a Generation of Stock Investors

Sunday, 07 Oct 2012 02:49 PM

Investors are yanking their money out of stock funds at such a clip that it might take a generation before they return in the numbers prior to the recession, said Steven Leuthold, of the Leuthold Group in Minneapolis, an institutional research firm.

Stock indices have doubled in value since a market low in March of 2009, thanks in large part to Federal Reserve stimulus measures, though investors since then have yanked a net $138 billion from mutual funds and exchange-traded funds that invest in U.S. stocks, according to the Investment Company Institute, a mutual-fund trade group, The Wall Street Journal reports.

Investors over the same period put $1 trillion into safe-haven bond funds, The Journal adds.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

Stock-market busts in the 1930s and in the 1970s sent many investors out for good, and such an exodus may be due for a repeat performance.

“I think we’ve lost another generation,” Leuthold tells The Journal.

Other studies are painting similar pictures.

The percentage of American families who say they own stocks or stock funds fell to 46 percent in 2011 from 53 percent in 2001, according to the Investment Company Institute, The Journal notes.

Only a quarter of households with retirement plans were willing to take above-average investment risk in 2011, down from 33 percent in 1998, the survey found.

Cash and real estate aren’t viable options for many investors either, leaving many in limbo.

“The fear in the mind and heart of the investor is more acute now than it was in the ‘70s, because the investor class today doesn’t know what to do, doesn’t see an option,” says David Kotok, president of Cumberland Advisors, which manages about $2 billion in Sarasota, Fla., the newspaper adds.

Even hedge funds that specialize in risks and specialized trading strategies are turning away from stocks.

The ratio of bullish to bearish bets among professional speculators fell recently and is below historical averages, according to a survey by International Strategy & Investment Group, Bloomberg reports.

“The level of net exposure suggests managers have not been chasing the recent rally,” International Strategy & Investment Senior Managing Director Oscar Sloterbeck tells Bloomberg.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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Investors are yanking their money out of stock funds at such a clip that it might take a generation before they return in the numbers prior to the recession, said Steven Leuthold, of the Leuthold Group in Minneapolis, an institutional research firm.
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Sunday, 07 Oct 2012 02:49 PM
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