Darfot: regarding "remember that most investors are doing anything but avoiding stocks."
I don't have figures for the macro level. I can speak of my social circle though. (I'm talking about a very small sample here -- I don't know that many people -g-)
I know only one other person who's been investing (buying or at least holding) and who's ridden the market down. I've got at least a couple who've cashed in their substantial stock portfolios for bonds. Others have decreased the amounts they're contributing to retirement accounts. Some others only invest sporadically like every few years when a broker can sell them on something hot (gold bullion now). Couple of others sticking to their own business or investing in collectibles or real estate. A few don't invest in anything. (unless family or boats, trucks, women, wine-and-song are considered investments)
Today I called my wife's broker to inquire about switching out of an IRA of my wife's that's 100% in a growth fund (Ha! Some growth. grrrrrr.) to a fund more like Dodge and Cox. The broker right away strongly recommended a balanced fund where the fund manager makes decisions between holding bonds and stocks (and where my wife might have some choice of which type of stocks - growth, large-cap, etc. I haven't seen the prospectus -- sounds like the ole' Fund of Funds game to me ---commission on top of commission.) Anyway, the point is that this type of recommendation is one more indication to me that brokers must believe that people won't any more be swayed to put their investing money into just growth stocks or value stocks.
Even here on SI, it seems rare to find a thread where people are buying stocks and holding them for more than just a quick trade. Sometimes it seems to me that Silicon Investor is almost more Silicon Schmoozer -- popular threads where posters have no intention of talking about stocks, let alone buying them.
I don't doubt that more people own stocks than ever before. And more will continue to do so because tax laws may favor it. It just seems to me that going forward, for people to commit to investing in specific companies they are going to have to see, and see clearly, how and maybe when they're going to get their money and profits out. Whether that's through a good size dividend, or a history of growing dividends, or substantial cash flows, or something else. I am looking at it like this today: for any stock with a p/e of 7, that's an earnings rate of about 14%. A buy-and-hold (assuming the earnings continue) where it takes maybe seven years to get your money back. About as far out as I want to look. Any p/e higher, there's got to be a moat or a good story. |
