NEW YORK — Andrew Neitlich is the last person you’d expect to be rattled by the stock market.
He once worked as a financial analyst picking stocks for a mutual fund. He has huddled with dozens of CEOs in his current career as an executive coach. During the dot-com crash 12 years ago, he kept his wits and did not sell.
But he’s selling now.
“You have to trust your government. You have to trust other governments. You have to trust Wall Street,” says Neitlich, 47. “And I don’t trust any of these.”
Defying decades of investment history, ordinary Americans are selling stocks for a fifth year in a row. The selling has not let up despite unprecedented measures by the Federal Reserve to persuade people to buy and the come-hither allure of a levitating market. Stock prices have doubled from March 2009, their low point during the Great Recession.
It’s the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II, an examination by The Associated Press has found. The AP analyzed money flowing into and out of stock funds of all kinds, including relatively new exchange-traded funds, which investors like because of their low fees.
“People don’t trust the market anymore,” says financial historian Charles Geisst of Manhattan College. He says a “crisis of confidence” similar to one after the Crash of 1929 will keep people away from stocks for a generation or more.
The implications for the economy and living standards are unclear but potentially big. If the pullback continues, some experts say, it could lead to lower spending by companies, slower U.S. economic growth and perhaps lower gains for those who remain in the market.
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Ordinary folks losing faith in stocks
CharlesWT
Seems kind of obvious, to me. If I had much money in stocks, I’d certainly get rid of it before Obama and his Democrat lapdog Senate have a chance to hike capital gains taxes, etc., which is just a week or so away. Last I heard, Buffet is also selling off big.
This will come as a stunning shock to postmodern so-called liberals, but tax policies have consequences. They will probably be flattened next year by the news that federal revenues fell way below their expectations. Again. Sheesh.
I am sure they will find a way to explain away their culpability. In fact, I have the utmost confidence in them to find a way to fix the blame on Republicans. (And at least some of them will even believe their own fabrications.)
I sold most of my stock this fall, and in my IRA moved most over to securer venues. After all, people on both sides of the aisle were predicting a double-dip even before the “fiscal cliff” metaphor was popularized; Obamacare is set to kick in; and Obama is now unrestrained by any possibility of re-election. Why would any small investors trust stocks right now?