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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Cogito Ergo Sum who wrote (3685)5/17/2001 12:46:30 AM
From: Mama Bear  Read Replies (1) of 74559
 
"Fewer people were in the market"

I think that there may be less folks in the market now that they are not covered by defined benefit plans. It is a mistake to say that someone who had a company pension was not in the market just because he had no direct ownership of stock. The company's pension plan put money aside, and invested it in the stock market in order to provide that pension. Even the most profligate employee had that benefit, and the corresponding stock market investment because of it. Now the profligate are allowed to choose to spend that money, which they do, because it is their nature. So there is no stock market investment for them, where there used to be. The cautious who do contribute to a 401k leave their money in money markets, where there would have been a stock market investment by the pension plan in the past. The reality is that the risk of stock ownership has been transferred to the employee by the switch to defined contribution plans.

Regards,

Barb
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