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Retail Investors Pile Into Stocks Amid "Malign, Unthinking Mental Slavery"
Submitted by Tim Price via Sovereign Man blog,
“Politicians and diapers have one thing in common. They should both be changed regularly, and for the same reason.” – Anonymous.
The French statesman George Clemenceau once commented that war is too important to be left to generals.
At this stage in the game one might be tempted to add that monetary policy is far too important to be left to politicians and central bankers.
We get by with free markets in all other walks of economic and financial life – why let the price of money itself be dictated by a handful of bureaucrats?
It should be striking that government bonds, in nominal terms, have never been this expensive in history, even as there have never been so many of them. The laws of supply and demand would seem to have been repealed.
As evidence for the prosecution we cite the US Treasury bond market, the world’s largest.
The US national debt currently stands at $17.7 trillion. With a ‘T’.
Benchmark 10 year Treasuries currently offer a yield to maturity of 2.5%. US consumer price inflation currently stands at 1.7%. (We offer no opinion as to whether US CPI is a fair reflection of US inflation.)
On the basis that US “inflation” doesn’t change meaningfully over the next 10 years, US bond investors are going to earn an annualized return just a smidgen above zero percent.
Now it may well be that US Treasury yields have further to fall. As SocGen’s Albert Edwards puts it,
“Our ‘Ice Age’ thesis has long called for sub-1% bond yields and I see this extending to the US and UK in due course.”
We nurse no particular view in relation to how the government bond bubble (for it surely is) plays out.
It could be that yields grind relentlessly lower for some time yet. Or perhaps they burst spectacularly on the back of the overdue return of economic common sense.
But as Warren Buffett himself once said, “If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.”
The central bank bond market poker game has been in train for a good deal longer than half an hour, and the stakes have never been higher.
Sometimes, if you simply can’t fathom the new rules of the game, it’s surely better not to play.
That’s why we’re not in the business of chasing US Treasury yields, or Gilt yields, or Bund yields, ever lower – we’ll keep our bond exposure limited to only the highest quality credits yielding the highest possible return.
Even then, if Fed tapering does finally dissipate in favor of Fed hiking (stranger things have happened, though we can’t think of any off the top of our head), it will make sense to eliminate conventional debt instruments from client portfolios.
But such madness is not limited to the world of bonds. Malign, unthinking mental slavery has fixed itself upon the equity markets, too.
It’s extraordinary that as stock markets have powered ahead, index trackers have enjoyed their highest ever inflows.
The latest IMA data show that more UK retail money was put into tracker funds in July than in any other month since records began.
In other words, retail investors are pouring into the market at its all-time high.
We accept the ‘low cost’ aspect of tracker funds and ETFs; we take serious issue with the idea of buying stock markets close to or at their all-time.
But there is a middle way between the Scylla of bonds at all-time low yields and the Charybdis of stocks at all-time high prices. Value.
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Stupid is as stupid does...
The only silver lining in today's silver drubbing is that its getting extremely oversold....but I guess the sell Silver buy GPRO trade is still alive and well today.
Not quite there.
Didn't TPTB do this last year at the start of golden week ?
Investment advice is forbidden on this site, but one has to ask themselves:
Is it better catching a falling knife in silver bullion, or buy stawks at all-time highs?
Breaking: Bust of Ed Sullivan stolen from TV Academy of Arts and Science in Holllywood.
If you wern't convinced America was fucked, we now have confirmation.
Retail investors? All two of them?
Yeah these guys
"one thing is clear: the retail investor is not coming back."
http://www.zerohedge.com/news/2014-09-23/why-institutions-are-so-despera...
I got completely out of the market in 2012 and every time I think about getting back in I just go to my local bar and buy a round for the house. It's cheaper and it makes people happy plus it actually does something for the economy.
welcome back
LOL, pile onto stocks, it's the only place to be and everyone knows it.
The Federal Resevere just keeps pushing everyone into stocks.
Or out of work. Why save when yields are at zero or worse? For me, near retirement, saving 1/2 my income no longer makes sense. So I stopped working, only rational thing to do.
They piled into the lower decks of the Titanic too.
There is no value in these markets, only Hades.
They all have an exit strategy that involves getting out faster than everyone else.
Everyone has a plan 'till they get punched in the mouth.
Mike Tyson
Read more at http://www.brainyquote.com/quotes/quotes/m/miketyson382439.html#M56qvYLJ...
Dad, why are we running toward that cliff?
Because we're Lemmings, son.
"Or perhaps they burst spectacularly on the back of the overdue return of economic common sense."
Really?
trend for interest rates past 30 years has been down ... i see NOTHING that changes trend
Well I piled into Gold and Silver...I wish I had piled into stocks..I didnt know they...the Central Banks would go this far to save their skin....and destroy mine....
When the supply is no longer able to be bought or found you will be in great shape...
Apparently the supply is infinite.
i remember laughing when Obama said this ... joke on me, however.
march 3rd, 2009 ... a few days before Saturn V market liftoff ...
"What I'm looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics."
...
"On the other hand, what you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it."
http://www.whitehouse.gov/the-press-office/remarks-president-obama-and-p...
eh what ZH? other day you're saying Retail investors no where to be found, now you're saying they're piling in? wtf make up your mind
eh what ZH? other day you're saying Retail investors no where to be found, now you're saying they're piling in? wtf make up your mind
i come here for the free hors d'oeuvres ...
Appears there is also a bubble in financial blogs.
That bubble has already popped. I've literally lost count of the blogs I used to follow that gave up or became hollow shells with no content. The real estate crash blogs were particularly short-lived.
I can't even see what the point of such a blog is - if you want to report what's up report all the images of all the houses in decline, falling apart, unsellable yet forclosed, all the retail office space which isn't being leased & so on.
Add comments as needed but pictures speak for themselves.
Non-experts shouldn't pose as experts.
Yuan to Start Direct Trading With Euro as China Pushes Usage - Bloomberg
And why not? Everything else the EU and the ECB has done has worked out soooo well.
Alan Greenspan | The Enduring Power of Gold | Foreign Affairs
I think the yield curve is so massively steep in the USA because "all the other debt is unsustainable.". So the sheeple buy German debt...sub one percent now...and feel great until the euro and ruble collapse.
Ignoring the entire field of economics for a moment " from whence comes the inflation of the asset"? If the answer is "by borrowing more!" how is that creating inflation? Since all fiat monies are in fact debt...
Yet the 'smart money' is either selling hand over fist, or buying in at record levels depending on what hour of the day it is.
"Since all Frn's are in fact debt the answer is not paying everybody!"
Value investing.
I like when people compare the US to Japan and say it will be the same. Japan had 0% interest with low inflation because Japanese people save money like crazy. It's wasn't newly printed money keeping the Japanese interest rate down. It was money already in circulation that was being directed toward Japanese bonds. In contrast, Americans don't save money, and now it's virtually impossible to save anything. People don't have savings that can flow into US government bonds. The only source of money would be printed money, meaning the only way to keep 0% interest on government debt would be to print money like crazy. Without money printing, the interest rates would look a lot like Greece or Spain a few years ago.
This market isn't a poker game; it's a god damned slot parlor.
It's the Moulin Rouge with everyone betting on the Green Fairy!
(who, by the way, is Kylie Minogue)
"But there is a middle way between the Scylla of bonds at all-time low yields and the Charybdis of stocks at all-time high prices. Value."
Don't see the idiom of 'Scylla & Charybdis' used much. Bob Chapman (Bless his soul) used to use it a lot.
Rigged to go up until rigged to go down.
Retail money moves nothing in this rigged casino.
Get in and get scalped. Once retail, or what's left of it, is IN, stocks will tank. Sure bet.
it's the bis's busy time, election time in america, telling the fed. to step it up a notch, and calling in favors from london, and ecb, buy american, give our boys something to campaign on.
i'm no expert but i'd say the price of pm's will keep dropping for at least another month.
BTFD
I'm curious what the effect of having 90% of all "in the stock market" money being in ETFs and tracker funds will be. These are derivatives - of stocks, which are themselves derivatives of actual (supposedly!) 'producing' companies...
In other words, what happens when 90% of "the market" is...bets on the market?
What better way to manipulate the market? Instead on a tail wagging the dog, we have a trillion tails wagging a trillion dogs.
1) Inception - dream collapse scene
2) Idiocracy - switching ends for the diagnosis machine
U kinda find it strange when on ZH they are so many knocking what are in effect just sheep.
Ovinians with a brain the size of a small ant and who literally think everything is so perfect for them.
I like it when the shit for brains assholes come on CNBC talking their pointless bollox, I love it when fucking asswipes spend their days and nights gibbering amongst each other about the latest stock tip and what they bought.
For fucks sake, let them get on with it.
I am sure those in here at ZH have all got their 401 cashed in and every other fucking overblown piece of worthless ponzi paper from stocks to bonds to any fucking property they don't actually live in all converted to an offshore account holding physical gold with a line of credit attached to it in any currency.
Just waiting to start to feed that line of credit into shorts on the whole fucking scam, because this is the window open now and it will close in 4 or 5 weeks.
You sell short or buy inverse ETF or get your puts in Place BEFORE the market tops.
You do not wait until it starts to fall because you are selling into a falling market.
And if you smart you will just feed your cash in and watch this shit storm come.
Close your eyes and ears to the markets when you are fully invested and short everything you can throw at it.
Come back in 2 or 3 or even 4 years when its time to start closing out. Again before the final bottom to get the best prices.
Don't fret about how its doing, don't waste your time hogging the papers and getting your self head fucked.And do not try to trade in and out of the market hoping you can get a bit more as the brief rallys appear.
They will fuck you over big time. Just stay in the game unchanging and short all the way to the bottom.
Shut it off, totally, just leave it and come back to see just how much you made but before a minimum 2 years have passed. That way you will have a very pleasant surprise. Because when you come back to have a look at how you doing you will find all the fucking brain dead sheep piling in today have made you rich in a few years.
And like every sheep shearing season, they end up naked.
And sheep shearing season comes round like clockwork and it doesn't stop until the their is no more to be fleeced.
Up fleecing, then down fleecing, its so easy. Just watch the sheep get covered in wool and and when it stops growing its time to get your sheers out for the next leg.
U love it when the fucking bullshitters get the sheeple to grow more wool, Because I can sheer them as good as wall street too, so I look at the fucking douch bags like liesman and cramer as free marketing for my FUTURE wealth. Ans its a coming, first week November is latest then I am piling into the shorts. So if anyone here happens to think this has a long way to go yet, then spend some money, get your wallet out, free some butterflies, Don't be a tightwad, spend spend spend.