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It's Official: Investors Like Stocks MORE Today Than They Did in 2000!

Phoenix Capital Research's picture




 

 

Last year, 2013, will likely go down as the beginning of the end for the bull market in stocks.

 

Since the market bottom in 2009, stocks have rallied over 170%. It’s been an incredible run, but I fear that we’re nearing the end.

 

From 2009-late 2012, most of the rally was driven by mutual funds and other large institutional investors. During this period, individual or “Mom and Pop” investors were largely investing in bonds.

 

 

 

This changed in late 2012. At that point, individual investors joined in and stocks entered a mania. You can see it clearly in the chart above.

 

You can also see this in fund flows movements: from 2009-early 2013, individual investors shunned stock-based mutual funds and poured their money into bonds instead.

 

This changed in early 2013, as investors suddenly found an appetite for stocks again, pouring a RECORD $324 BILLION into US stock mutual funds.

 

To put this into perspective, this means investors put more money into stocks this year than they did in 2000: at the very peak of the TECH BUBBLE!

 

Which brings us to today.

 

Today investors are more bullish than at any point in 20 years. In fact, they are so bullish they are borrowing money (called margin debt) to BUY stocks at fastest pace in history.

 

Companies like Twitter, which have never made a penny in profit, are valued at tens of billions of Dollars.

 

In short, the market, taken as a whole, is overbought, overvalued, and overextended.

 

Now, this doesn’t mean that stocks cannot go higher from here. After all, market manias always tend to last long than you expect.

 

However, it does mean that “the good times” are ending. And the likelihood of stocks posting another massive up year is very slim indeed.

 

In this environment, it’s wise to lighten up on ownership to the longside. It’s even wisier to look for beaten down undervalued companies that offer you good down side protection.

 

For a FREE Special Report outlining how to profit from bear market crashes and bull market runs, swing by: http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

Phoenix Capital Research 

 

 

 

 

 

 

 

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Mon, 12/30/2013 - 20:31 | 4286956 mcgoverntm
mcgoverntm's picture

I agree with the statement that "In short, the market, taken as a whole, is overbought, overvalued, and overextended," but the comments on the S&P 500 chart and other comments are garbage.

First, "Institutions front-run the Fed."  Front-running has to do with a floor broker seeing a big buy or sell order in his/her DAILY order book and using that knowledge to trade ahead of the big order.  It is an intra-day phenomenon.  The period covered by the comment on the chart is two years.  Calling two years of market action "front-running" is a complete misuse of the word and a disservice to readers.

Re: "This changed in late 2012. At that point, individual investors joined in and stocks entered a mania. You can see it clearly in the chart above."  More garbage.  No one can tell from a price chart who is driving the market action.

Re: "You can also see this in fund flows movements: from 2009-early 2013, individual investors shunned stock-based mutual funds and poured their money into bonds instead."  I cannot see it in the flow of funds data because that data was not provided in the article.  The writer should have included the data and a link to the data so that the reader could verify the accuracy of the statement.

Re: "Today investors are more bullish than at any point in 20 years. In fact, they are so bullish they are borrowing money (called margin debt) to BUY stocks at fastest pace in history."  The same issue hear as with the flow of funds: The writer should have included the data and a link to the data so that the reader could verify the accuracy of the statement.

I suggest that Zero Hedge exercise more editorial oversight to prevent such poorly-reasoned essays from being published on its fine blog.

Mon, 12/30/2013 - 19:59 | 4286867 MrVincent
MrVincent's picture

Facebook and Twitter make Etoys look like the best stock of the century. The valuations of today's internet stocks are quite immpossible to imagine. Facebook is valued about the same as Disney, which itself has had a huge run over the last few years. The fed has succeeded in inflating away the nations debts to some degree. More to come if the market crashes.

Mon, 12/30/2013 - 20:29 | 4286958 nofluer
nofluer's picture

The Fed has also managed to inflate away a huge chunk of the nation's real tangible wealth.

Mon, 12/30/2013 - 18:43 | 4286666 theta
theta's picture

"Since the market bottom in 2009, stocks have rallied over 170%. It’s been an incredible run, but I fear hope that we’re nearing the end"

Fixed it for you guys. You've been hoping for this for years now. Good luck.

Mon, 12/30/2013 - 20:27 | 4286950 nofluer
nofluer's picture

Adjust for the 30% real inflation rate (-120%), then discount the decline of the real value of the stock/company and I'm thinking that if you broke even you've done well. Seems like a lot of risk for no return. Have you maybe thought about picking up pop cans instead? Low cost investment/entry into the industry and it's all "profit"...

Mon, 12/30/2013 - 20:30 | 4286964 thomasincincy
thomasincincy's picture

"Have you maybe thought about picking up pop cans instead? Low cost investment/entry into the industry and it's all "profit"..."

Have you seen the competition out there? Brutal...Scrapyard packed with people. It seems like a scrapyard on every corner in the US

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