Central Bank Attempt To Sucker In Retail Investors Back Into Stocks Has Failed

Tyler Durden's picture

In what should come as no surprise to anyone who has a frontal lobe, yet will come as a total shock to the central planners of the world and their media marionettes, the latest attempt to sucker in retail investors courtesy of a completely artificial 20% stock market ramp over the past 4 months driven entirely by the global liquidity tsunami discussed extensively here in past weeks and months, has suffered a massive failure. Exhibit 1 and only: as ICI shows today, following what is now a 20% ramp in the stock market, not only have retail investors continued to pull out cash from domestic equity mutual funds (about $66 billion since the recent lows in October, the bulk of which has gone into bonds and hard commodities), but the week of February 29, when the market peaked so far in 2012, saw the biggest weekly outflow of 2012 to date, at -$3 billion. Alas, this means that the traditional happy ending for the authoritarian regime, whereby stocks get offloaded from Primary Dealers, and GETCO's subsidiaries, to the retail investor, is not coming, and soon the scramble for the exits among the so-called "smart money" will be a sight to behold.

The Globe and Mail has some observations on just this:

Retail investors, after gutting it out through years of awful returns, have finally fled. In a normal market, retail participation – Mr. and Mrs. Public trading their personal accounts – should be about 20 per cent. That plunged in November and December, traders say.


It could be that Canadian investors suddenly and finally tired of the relentless volatility, or the long-term returns that have barely cracked positive territory.


Perhaps the most likely candidate for the drop-off is a decline in activity by the same high-frequency traders who helped boost volumes so dramatically in the preceding few years, and who now constitute roughly a third of the market by many estimates. So-called HFTs were drawn to Canada by incentives from markets such as the TSX, and by the opportunity to trade against investors big and small who weren’t wise to their tricks.

The same HFT that Zero Hedge dedicated the early days of its existence into exposing for the massive market, volume, and liquidity manipulating and momentum perpetuating sham it is now perceived by everyone.

As for HFT, after destroying any semblance of a rational market, the participants have finally turned on each other, in the same cannibalization that we had been warning for the past 3 years. In fact, Traders Magazine has dedicated its entire cover story "Fear Factor" to precisely this:

On Wall Street, risk is suddenly a four-letter word. Retail investors can't stomach it. Pension plan sponsors are allocating away from it.


That's bad news for stocks. Volume has been dropping almost nonstop for three years and shows no signs of improvement. The situation is worse than it was following the crash of 2000. It's worse than it was after the crash of 1987. Fearful of the future and still wincing from 2008, investors are moving funds into bonds, commodities, cash, private equity, hedge funds and even foreign securities-anything but U.S. stocks.


"Our bread and butter is the retail investor," Scott Wren, a senior equity strategist at Wells Fargo Advisors, one of the country's four largest retail brokerages, told Bloomberg Radio recently. "They're not jumping into the market. They're not chasing it. Those who have been around for a little bit have been probably burned twice here in the last 10 years or so. They're definitely gun-shy. They're not believers. I'm not sure what it's going to take to get them back in the market."

Good work you central planning idiots and 21 year old math PhDs - you finally succeeded in terminally and completely breaking the market.

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TruthInSunshine's picture

If a TBTF-zombified entiy or a stuffed-to-the-gills-with-"stocks" hedge fund wants to sell a tree in the forest, but no one is there to buy it, is there a market maker, and what's the tree worth?



... I screwed that up horribly.


I will fix it. Give me a few.

Xkwisetly Paneful's picture

This is obviously bullish for equities as is QE3 no different than commodities or anything else for that matter.

redpill's picture

Funny that most folks don't like the idea of entrusting their retirement to a giant pyramid scheme that has run out of new fodder.

Xkwisetly Paneful's picture

No it's funnier believing they are entrusting it any more or less than to lumps of metals.

Only the blind man can't see the government's are currently behind everything moving higher/lower and instead feel the tail and call the elephant a dog.

sun tzu's picture

What's funnier is that you're a retarded chimp and you don't even know it

r101958's picture

Abruptly; avatar pic is too small. Bigger pic please. For those who don't already know....kawaii=cute in Japan.  Sorry, couldn't help it!

AbruptlyKawaii's picture

it's a pic of a suicide girl ...theyre hot (even though i like chics sans tats; only cause im a contrarian, not because i have anythning against tats, you know, when the subculture becomes the main culture,  it aint my thing) ...i got the handle from serendipity name/handle generator....went with it






rocker's picture

 Suicidegirls is very justified.  When will Bambi or the Fed get it.  The market is Rigged by HFTs and Goldman Sachs.

 I have tried on many pull backs. Sometimes good and then here comes the HFTs ripping you off. 

 You can buy under book value with real growth, they take it down. You buy undervalued and it goes lower.

 Metrics, TA and DDD do not work. The only thing that matters is they can see your UPL and go after it.

 Until somebody tells the NYSE that selling seats in front of your trade is a bad idea. It is nothing less than a pure rip off.

 Fuck them all.  Buy Physical PM's as I have and win. All my physical PM's are up nicely.  

It's a shame I don't have enough money to buy a tanker of physical Oil like Goldman, JPMorgan and Deutche Bank have.

Go physical. The market is a pure paper scam. Just like paper dollars.

smlbizman's picture

and the reason this continues, is because of unintended consequences...douche bag has given people an exit point by levitaing ...just like myself...after the 2008 debacle...i hung in until i got back to where i was and bye bye....if he wants to keep them in it ,crash the market...momos hang on to underwater stocks...cant stand to book a lost.. ...and i could be completly wrong

Comay Mierda's picture

retail investors are taking their money out to deleverage and/or pay for their higher cost of living courtesy of the bernank

CrazyCooter's picture

I have been 100% out of stocks as far as retirement allocations go since after '08.

I refuse to go back in, in any capacity, until this bitch crashes. I am not talking a correction, I am talking wrath of god mean reversion plus overshoot.

It can't happen because the system would explode ... so we get to watch these "players" eat each other ... hehe ... suckers



Pladizow's picture

The public beheading of a banker will get me back!

JPM Hater001's picture

Corzine isnt doing anything...

Oztralian's picture

so you've missed out, ya knucklehead

Zero Govt's picture

nope, Corzines still available

sun tzu's picture

missed out on a ponzi scheme? darn!

ltsgt1's picture

Me too. I have been out of stocks and switch over to gold.

Cdad's picture

This session today was absolutely desperate, Truth.  Absolutely breathlessly moronic.  Just the market action today, out of sheer stupidity and desperation, augers for a bear market correction....20%.  And after that, the panic.

All under the smoke screen of the freakin' iPad 3...a meaningless device...meaningless except to entirely brain dead people.


Jake88's picture

Good deals on iPads coming soon at your local pawn shop.

HelluvaEngineer's picture

too bad the batteries will all be dead...

Fred Hayek's picture

Bill Dudley's breathlessly awaiting the release of this update, hoping that this version of the Ipad will, in fact, be edible.

J 457's picture

Ditto about Ipad 3.  These devices have people in a trance like fog.

Zero Govt's picture

i've just seen the iPad3 advert ...friggin brilliant

..or you could just wait for the cheaper, dumber, less reliable, me-too version from also-ran Google

TruthInSunshine's picture

Cdad, the markets are like those funhouse mirrors. Bernankified. Warped. Broken.

There are no markets. It's truly all an illusion.

At least holders of electronic stock certificates can eat those shares when the shit hits the fan, and there's inevitably no greater fool to pawn them off on.

r00t61's picture

When a game of three-card monte is finally recognized for the crooked con that it is, what's a huckster to do?

The Big Ching-aso's picture



"I'm not sure what it's going to take to get them back in the market."

Let me give you a phucking hint, Braniac.   Quit phucking shyster-scamming investors at every phucking opportunity you phucking get.


Vampyroteuthis infernalis's picture

How about giving people jobs so they can get back into the market. It is kinda hard to buy stocks when you are broke!

Hugo Chavez's picture

Find a new game and a new mark.

Strider52's picture

I'm starting to get addicted to Zynga no-limit hold 'em, me self. It's all play chips, but they're still hard to get. If you have to gamble, forget stocks, just buy phys and play poker for free. I still have yet to lose any money, gold, silver, guns, food, water, or ammo. Except for the boating accident of course.

Dow 36000's picture

This means stocks are going up...right?

JPM Hater001's picture

Yes.  I heard something about infinity.

taniquetil's picture

So without the illusion of stock markets to fund 401ks, and bond interest rates at 0, what is Average Joe going to do as their retirement cash gets inflated into nothingness?

tekhneek's picture

Wait until gold's "too expensive" to acquire then pile into silver like everybody else will.

Dr. Engali's picture

Even my most "unsophisticated " clients know this market is detached from reality. But when I suggest they need to put a portion of their holdings in gold and silver they look at me like I'm nuts.

tekhneek's picture

It's pretty amazing how fucking retarded the "average" person is concerning personal finance, budgeting, saving, investing. 11 credit cards, triple re-financed house and 2 car leases. Way to go.

And I'm the dumbass because I'm buying gold and silver.

LowProfile's picture

"And as it was foretold, yea, verily, did the dumbasses inherit the Earth."

Durden, 12:12


tekhneek's picture


"Though I walk through the valley of the shadow of debt I shall fear no margin call, for Durden is with me. His charts and prose they comfort me."

Bitchez 1:1

taniquetil's picture

Lesson 1: If you're not in debt, liquidity, and margins are irrelevant.

Solarman's picture

You just have to make sure what you do buy is free of a counterparty or is deriviative itself.  Anything generating cash right now is at risk of default from somewhere else.

Dead Canary's picture

And I heard a voice in the midst of the four beasts, And I looked and behold: a pale horse. And his name, that sat on him, was DEBT. And Hell followed with him.
~ Book of Revaluations

I should be working's picture

I think his name was Bernank...

catacl1sm's picture

Yeah, my friends think I'm crazy when they find out I'll pay $100 for $4 face value of pre-1964 dimes.

tekhneek's picture

I paid $400 for $15.75 worth of quarters and dimes. My girlfriend said "at least they still accept debt for money" she gets it.