Nyse Trading Days 2010

Where Have Investors Gone? January 15, 2010

Being Street Smart

Sy Harding

Where Have Investors Gone? January 15, 2010.

As Pete Seeger might have written it and the Kingston Trio might have sung it in the sixties, ‘Where have stock investors gone, long time passing? Gone to bond funds every one, long time ago.’

Will the last lines to that great folk song also become part of the picture? “When will they ever learn? When will they ever learn?”

I bring that up given that investors are still largely missing from the bull market. And as I wrote in my daily blog a few days ago, statistics show that most investors who lose money over the long-term do so because they become fearful after suffering big losses in a bear market, swear off “the damned market for good”, and don’t become interested again until the next bull market has been underway for a long time. They then pile in with abandon in an effort to catch up after the bull market has just about run its course, and the next bear market is due. The cycle then repeats.

We seem to be at a point now where investors have sworn off “the damned market for good”. As one participant in a website discussion put it this week, “Most people I know in their 50s and 60s are done with the market – period. It could go up another 300%. They don’t care. With bonds at least we can sleep at night.”

Will they be right this time?

In the past they have stuck with that thought for quite some time, often several years, until they learn how much their friends and neighbors have been making in the stock market again.

Investors continued to pull money out of the stock market well after the 1973-74 bear market had ended, after the 1987 crash, after the 1990 bear market, and certainly after the 2000-2002 bear market. As money-flow research firm Trim Tabs reported, “After the 1987 crash investors pulled $20 billion out of equity mutual funds, and then made the opposite mistake of putting $22 billion back into the stock market only a year before the 1990 bear market.”

The pattern was never more clear than in the recent bear market, and new bull market.

Most investors, believing themselves to be buy and hold investors, held on most of the way down in the severe bear market. A record amount of money flowed out of equity mutual funds and into bond funds not near the top in 2007, but between November, 2008 and the end of the bear market in early March, 2009. In fact, the panic to get out of stocks and into bonds during the final four months of the long bear market created an unusual spike-up bubble in bond prices in late 2008 (which then burst, with bond prices tumbling 19% last spring, and still not recovered).

The exit from the stock market has continued even as the stock market rally off the March low turned into a new bull market. (A bull market is defined as at least a 20% gain over a period of time).

As Dan Sullivan of The Chartist newsletter notes in his current issue, “Between July 31 and November 30 investors pulled $36 billion out of domestic equity funds, and pumped $142 billion into taxable bond funds. Since November 30 through the end of the year they pulled another $10 billion out of domestic equity funds while putting $35 billion into bonds.”

As Sullivan continues, “Obviously the public is not aboard this bull market. Investors on the sidelines view the rally with great suspicion, wondering when the next shoe will drop, with the bear market reasserting itself. However, they will come back, as they always have.”

The absence of public investors has not prevented a strong bull market, rising on very low volume, as financial publications have been noting. On average not much more than one billion shares have been trading daily on the NYSE for some time, compared to close to two billion in previous years, and as many as three billion daily in some periods when investors decide it’s time to really pile in.

So the beneficiaries of the new bull market have primarily been professional traders, and professional investors at hedge funds, banks and other institutions. In fact, banks have been reporting large profits due primarily to their trading and investments, even as their loan losses pile up.

There is a ton of money pulled out of the market, on the sidelines in money market funds and bonds. It was hoped that the new year would see volume pick up with some of that sideline money coming in. But so far it hasn’t happened.

Meanwhile the bull market has continued in its stealth mode of slowly creeping higher on very low volume, just enough negative days to keep wary investors wary, participants still slowly making gains even as sideline money doesn’t budge.

After such a dramatic run-up off the March low the market is probably due for some profit-taking and at least a short-term pullback. One indication is that so far the market is not responding positively to even big earnings surprises (like Intel and JP MorganChase’s) as the important fourth quarter earnings reporting period gets underway. A short-term correction would likely convince the sideline money that it has it right this time, and even more reluctant to come off the sidelines.

And after two months of low volatility, with big daily moves in either direction absent, a return to frequent daily moves of 250 and 300 Dow points is also likely, not conducive to creating investor confidence.

So the next few weeks could be a testing time for both bulls and bears.

Sy Harding is editor of www.StreetSmartReport.com, and the free daily market blog, www.streetsmartpost.com.

About the Author

Sy Harding is CEO of Asset Management Research Corp., author of 1999′s Riding the Bear and 2007′s Beat the Market the Easy Way, editor of www.StreetSmartReport.com, and www.streetsmartpost.com.

NYSE Euronext $68.51 High Quality Content by WIKIPEDIA articles NYSE Euronext, Inc. (formerly NYSE Group, Inc. and Euronext N.V.) (NYSE: NYX) is a EuroAmerican forprofit corporation that operates multiple securities exchanges, most notably Euronext, New York Stock Exchange (NYSE), and NYSE Arca (formerly known as ArcaEx). NYSE Group also operates NYSE Regulation, which is a nonprofit SelfRegulatory Organization that oversees securities firms and companies listed on the New York Stock Exchange and NYSE Arca. Author: Surhone, Lambert M./ Tennoe, Mariam T./ Henssonow, Susan F. Binding Type: Paperback Number of Pages: 80 Publication Date: 2010/08/25 Language: English Dimensions: 6.00 x 9.02 x 0.19 inches

Navaho Trading Days $34.41 Elizabeth Hegemann, born in Cincinnati in 1897, was an accomplished photographer and a woman who enjoyed adventure. These qualities along with her marriage to an Indian trader and living most of her adult life in Southern California, Arizona, and New Mexico allowed her to leave a significant record of the Southwests American Indians during the 1920s and 1930s.Hegemanns photographs document interaction between Anglos and Indians, ceremonial dances, trading post life, and archaeological monuments that have been altered by time. Her text recounts her travels around Navaho country, especially the northeastern portion of the Reservation. She comments on her meetings with John Galsworthy, Charles F. Lummis, William Randolph Hearst, and Will Rogers. Author: Hegemann, Elizabeth Compton Binding Type: Paperback Number of Pages: 388 Publication Date: 2004/08/01 Language: English Dimensions: 10.26 x 7.80 x 0.84 inches

NYSE Composite $68.51 High Quality Content by WIKIPEDIA articles The NYSE Composite (NYSE: NYA) is a stock market index covering all common stock listed on the New York Stock Exchange, including American Depositary Receipts, Real Estate Investment Trusts, tracking stocks, and foreign listings. Over 2,000 stocks are covered in the index, of which over 1,600 are from United States corporations and over 360 are foreign listings; however foreign companies are very prevalent among the largest companies in the index: of the 100 companies in the index having the largest market capitalization (and thus the largest impact on the index), more than half (55) are nonU.S. issues. This includes corporations in each of the ten industries listed in the Industry Classification Benchmark. It uses freefloat market cap weighting. Author: Surhone, Lambert M./ Tennoe, Mariam T./ Henssonow, Susan F. Binding Type: Paperback Number of Pages: 80 Publication Date: 2010/08/25 Language: English Dimensions: 6.00 x 9.02 x 0.19 inches

Thirty Days of Forex Trading $63.75 This book is in New – Excellent condition

Fast Money: 7 Days to Successful Options Trading $24.52 Fast Money: 7 Days to Successful Options Trading will introduce the curious investor or novice options trader to the exciting potential of stock options and how to get started quickly and successfully trading stock and stock index options on US markets. The title of this book promotes the idea that if you read one chapter each day (and understand it) by the time you finish the last chapter; youll have enough knowledge to get started successfully trading stock and index options. Author: Napier, Victor Binding Type: Paperback Number of Pages: 116 Publication Date: 2008/02/01 Language: English Dimensions: 9.00 x 6.00 x 0.28 inches

Nascar 2010 Elements 12-pack Trading Cards $63.36 Nascar 2010 Elements trading cards feature your favorite Nascar drivers from the 2010 Nextel Cup Series.Nascar 2010 Elements trading cards feature your favorite Nascar drivers from the 2010 Nextel Cup Series.Collect our favorite driver for the 2010 Nascar Nextel Cup SeasonEach pack features superstar Danica Patrick on front of the packEach pack contains 6 cardsEach bundle contains 12 packsMaterials: CardboardDimensions: 5 inches long x 3 inches wide x 3 inches deepModel: 132129

ShortTerm Trading $105.14 High Quality Content by WIKIPEDIA articles Shortterm trading refers to those trading strategies in stock market or futures market in which the time duration between entry and exit is within a range of few days to few weeks. There are two main school of thoughts: day trading and trend following. In finance, a trading strategy (see also trading system) is a predefined set of rules for making trading decisions. Traders, investment firms and fund managers use a trading strategy to help make wiser investment decisions and help eliminate the emotional aspect of trading. A trading strategy is governed by a set of rules that do not deviate. Emotional bias is eliminated because the systems operate within the parameters known by the trader. The parameters can be trusted based on historical analysis (backtesting) and real world market studies (forward testing), so that the trader can have confidence in the strategy and its operating characteristics. Author: Surhone, Lambert M./ Tennoe, Mariam T./ Henssonow, Susan F. Binding Type: Paperback Number of Pages: 156 Publication Date: 2011/01/19 Language: English Dimensions: 6.00 x 9.02 x 0.36 inches

Trading by Numbers (Hardcover) $91.18 Get the E*Trade experts` inside track on playing the marketsFor retail traders, knowing which possible strategies to employ when has always been a challenge. That is, until now. For the first time, popular E*Trade educators Rick Swope and Shawn Howell introduce their two-dimensional scoring system for determining how bullish/bearish a trade setup looks by reading charts. In Trading by Numbers, they present a scoring system that uses a trend score and a volatility score, removing the guesswork and giving you a solid guide to the markets. Based on the score, the authors provide a toolkit of option strategies that are best to execute in each specific situation. Using common indicators and patterns, the book provides analysis for choosing your right strategy while managing risk. Authors Swope and Howell are accomplished market educators and their partners are the leaders in trading and investing, including E*Trade, CBOE, OIC, NYSE, NASDAQ OMX, CME and ISEAn easy-to-use guide that will help you make the best decisions in any situation, the book is essential for traders at all levelsTrading by Numbers outlines a proprietary market scoring system that helps traders determine the best option strategies to execute in any market climate.