Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (190101)	8/30/2002 10:27:19 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

Comstock on public participation >>By way of comparison, let's look at the current environment. There were 4,000 equity mutual funds at the peak in the first quarter of 2000 and 4,800 now. Shareholder accounts numbered 154 million at the top and have actually grown to 169 million today. There are two major points we would like to make about these figures. First, the sheer magnitude of public participation in the stock market through mutual funds in terms of both dollar amounts and shareholder accounts dwarf anything we have seen in the past. Obviously, a decision by a relatively small fraction of these holders to sell all or part of their shares would throw the market into a further sharp downturn. Second, we find it astounding that the number of funds and shareholder accounts have actually risen substantially over the past two and a half years. Some observers believe that this reluctance to sell indicates that investors are acting differently than in past boom-bust cycles and that they will keep their money in stocks. We disagree. In our view investors have not been frightened enough to sell since the long secular bull market from 1982 through 2000 rewarded investors who held on and bought the dips. In addition some analysts have estimated from past monthly fund inflows that investors still have profits of about $150 billion now, down from a peak of $800 billion. We sense, however, that investors were becoming exceedingly fearful during the June-July market decline, and were on the verge of throwing in the towel. We believe that as the next market downleg puts the average fund holder below the breakeven point, panic selling is a strong possibility. All past bear markets have ended only after investors disgorged stocks "en masse", and we see no reason why this time will be an exception. In the end fear overwhelms all other factors, and the need for a good night's sleep takes precedence over everything else. <<