John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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John Pitera

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To: John Pitera who wrote (18705)	2/5/2017 1:13:07 AM
From: Elroy	3 Recommendations Read Replies (2) of 33421

the % of American's who are directly invested in the stockmarket is at a 20 or 30 year low..... That line of thinking is a fallacy A very large percentage of the USA is living paycheck to paycheck, and the WSJ had an article in the past 2 weeks that highlighted the percentage of the population in the US that did not have even an extra thousand or $1500 in savings in the event of an unexpected emergency expense. Well, haven't there always been a significant percentage of the USA living paycheck to paycheck? If the number directly invested in the stock market is at 20 to 30 year lows, and the percent living paycheck to paycheck over those 20 to 30 years has remained stable, who cares about the percent living paycheck to paycheck? It's the same as it was when the number of people directly invested in the stock market was at a 20 or 30 year high. The point is whether there is or is not cash sitting on the sidelines waiting to get in. I never know how people calculate that number (cash on the sidelines), but the percent living paycheck to paycheck wouldn't be a factor unless you're going to claim that that percent has gone up a lot recently, so more of today's sideline sitters don't have any money to invest, unlike previous cycles when the sideline sitters had lotsa money to invest. My hunch is the rise of discount brokers in the 1970's and then online brokerage in the dotcom bubble pushed loads of individuals directly into the market. Then, loads of them got burned in the two debacles (dotcom in '00 and housing in '08), and so we're probably now at a fairly stable number for percent directly invested in the market. I doubt the amount of cash held by individuals/families that are not directly invested in the stock market isn't too much. Just my guess. Even if a million new investors join, they probably bring an insignificant amount of money per family to move the market around much. That's my guess.

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