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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Wed, 03/07/2012 - 17:49 | 2233677 toothpicker
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Wed, 03/07/2012 - 17:52 | 2233690 TruthInSunshine
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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.

Wed, 03/07/2012 - 17:58 | 2233726 AbruptlyKawaii
AbruptlyKawaii's picture

fukin brilliant

Wed, 03/07/2012 - 18:06 | 2233760 Pladizow
Pladizow's picture

Scared beats dumb!

Wed, 03/07/2012 - 18:40 | 2233872 JPM Hater001
JPM Hater001's picture


Thu, 03/08/2012 - 00:01 | 2234693 Xkwisetly Paneful
Xkwisetly Paneful's picture

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

Wed, 03/07/2012 - 18:07 | 2233772 redpill
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.

Wed, 03/07/2012 - 18:42 | 2233879 prains
prains's picture

Too Big To Fuck

Wed, 03/07/2012 - 20:18 | 2234243 Zero Govt
Zero Govt's picture

Too Broke To Float

Thu, 03/08/2012 - 00:04 | 2234698 Xkwisetly Paneful
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.

Thu, 03/08/2012 - 00:47 | 2234816 sun tzu
sun tzu's picture

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

Thu, 03/08/2012 - 03:09 | 2235071 eaglefalcon
eaglefalcon's picture

too busted to fix

Wed, 03/07/2012 - 18:09 | 2233780 r101958
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!

Wed, 03/07/2012 - 18:53 | 2233930 AbruptlyKawaii
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






Wed, 03/07/2012 - 23:44 | 2234661 rocker
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.

Wed, 03/07/2012 - 18:51 | 2233913 smlbizman
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

Wed, 03/07/2012 - 17:59 | 2233728 Comay Mierda
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

Wed, 03/07/2012 - 17:59 | 2233735 CrazyCooter
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



Wed, 03/07/2012 - 18:08 | 2233777 Pladizow
Pladizow's picture

The public beheading of a banker will get me back!

Wed, 03/07/2012 - 18:41 | 2233876 JPM Hater001
JPM Hater001's picture

Corzine isnt doing anything...

Wed, 03/07/2012 - 18:40 | 2233873 Oztralian
Oztralian's picture

so you've missed out, ya knucklehead

Wed, 03/07/2012 - 20:24 | 2234261 Zero Govt
Zero Govt's picture

nope, Corzines still available

Thu, 03/08/2012 - 00:49 | 2234820 sun tzu
sun tzu's picture

missed out on a ponzi scheme? darn!

Thu, 03/08/2012 - 08:54 | 2235441 ltsgt1
ltsgt1's picture

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

Wed, 03/07/2012 - 18:02 | 2233742 Cdad
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.


Wed, 03/07/2012 - 18:22 | 2233823 Jake88
Jake88's picture

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

Wed, 03/07/2012 - 19:07 | 2233982 HelluvaEngineer
HelluvaEngineer's picture

too bad the batteries will all be dead...

Wed, 03/07/2012 - 18:58 | 2233945 Fred Hayek
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.

Wed, 03/07/2012 - 19:07 | 2233981 J 457
J 457's picture

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

Wed, 03/07/2012 - 20:26 | 2234265 Zero Govt
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

Thu, 03/08/2012 - 02:58 | 2235045 TruthInSunshine
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.

Wed, 03/07/2012 - 18:02 | 2233746 r00t61
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?

Wed, 03/07/2012 - 18:09 | 2233768 The Big Ching-aso
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.


Wed, 03/07/2012 - 20:46 | 2234315 Vampyroteuthis ...
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!

Wed, 03/07/2012 - 18:11 | 2233785 Hugo Chavez
Hugo Chavez's picture

Find a new game and a new mark.

Wed, 03/07/2012 - 18:46 | 2233900 Strider52
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.

Wed, 03/07/2012 - 17:49 | 2233680 Dow 36000
Dow 36000's picture

This means stocks are going up...right?

Wed, 03/07/2012 - 18:43 | 2233885 JPM Hater001
JPM Hater001's picture

Yes.  I heard something about infinity.

Wed, 03/07/2012 - 17:49 | 2233681 taniquetil
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?

Wed, 03/07/2012 - 17:52 | 2233689 tekhneek
tekhneek's picture

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

Wed, 03/07/2012 - 17:56 | 2233707 Dr. Engali
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.

Wed, 03/07/2012 - 18:08 | 2233776 tekhneek
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.

Wed, 03/07/2012 - 18:31 | 2233840 LowProfile
LowProfile's picture

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

Durden, 12:12


Wed, 03/07/2012 - 18:37 | 2233855 tekhneek
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

Wed, 03/07/2012 - 18:42 | 2233886 taniquetil
taniquetil's picture

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

Wed, 03/07/2012 - 20:17 | 2234241 Solarman
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.

Wed, 03/07/2012 - 19:17 | 2234016 Dead Canary
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

Wed, 03/07/2012 - 20:12 | 2234224 I should be working
I should be working's picture

I think his name was Bernank...

Wed, 03/07/2012 - 18:31 | 2233843 catacl1sm
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.

Wed, 03/07/2012 - 18:39 | 2233865 tekhneek
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.

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