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Tuesday, April 9, 2013

Rising Fortunes of the US Stock Market

By Joe Davies


55 Bln Bucks flowed into the US stock market in Jan, the highest monthly inflow on record!

Retail investors have been scared off of investing into the stock market since the 2008 collapse. However they are getting more and more involved after watching the continuing rise of the stock markets with several feeling they are missing out on higher returns through the markets.

The question is, is it to late to jump on the rally? Let's come clean, the big gains have just been observed by those brave enough to jump back in, in 2008. The million buck question is, will the rise continue or will the retail investor be left holding the bag?

Institutional investors made use of the reasonable prices and added to their positions throughout , so anybody with money invested would have benefited from this.

Retail speculators feel they have missed out and are fed up with sitting on the side lines while everybody else cashes in, while they stay invested in low risk, low yielding investments.

As the saying goes "fortune favors the bold" and the ones that were have profited well from it. However trying to play catch up because you feel you have missed out is a very dangerous mental condition.

Having said that it certainly appears the retail financier is more hopeful on stocks and not frightened of the markets collapsing. It is still to be seen irrespective of whether or not they will truly put their money in jeopardy, but the signs look to be there.

Apparently over 52% of retail investors are bullish on the stock market which is the highest reading since the start of 2011. This is accompanied by the Wall Street Vix having its lowest reading since mid 2007.

Since 2008 retail stockholders have been pulling their cash out of the stock market as it has rallied. With a sense of relief that they had not lost everything and probably paying down other liabilities or losses with the gains. Now it looks that the cash is coming into the market rather than just flowing out, with over 11 billion into stock hedge funds in only two weeks, the highest since the beginning of this century!

Many brokers are reporting a serious increase in the amount of trades being taken daily by retail investors, another inspiring sign. This joined with the upturn in the USA economy is excellent news for speculators searching for higher returns on their capital.

It's phenomenal to suspect that the American stock market has risen by more 120% since its 2009 lows giving financiers more reason to get involved. Couple this with the dodging of the fiscal cliff and the US defaulting, the retail financier is feeling confident to put their cash to work again in the equity markets.

It's going to be interesting to see the following chapter of this recovery and whether the retail financier basically is coming back into the market at the right time...




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