It would appear based on the current action of the Stock Market others are seeing the risk of holding Stocks. I am not looking for agreement because when others agree it shows up in the action of the Stock market. I do want to point out something that I have mentioned before. The SIZE of the Stocks held. The number of Stocks held by various individuals, Companies, Mutual Funds, Fund Managers a very long list of those HOLDING Stocks. Compare this size (inventory) to the size of the buying power (demand). When you take time to consider this one small fact.. Supply VS Demand. It makes it easy to understand the problem facing the Stock Market, and that is Supply FAR exceeds Demand. You will remember economics 101.. when Supply exceed Demand prices will fall. Add “fear”. If fear sets in then there is a double impact on prices. Those that want to sell their stocks must sell into a market of buyers that do not want the ownership of the Stock offered. Both the Supply side and Demand side see the risk of Stocks going lower. It could get nasty.
A recent example of this scenario is the housing market. When the housing bubble popped more supply hit the market than buyers. Prices fell sharply to encourage buyers plus lower interest rates still the inventory exceeded the demand. Added to the problem of the housing market continues to be the number of buyers that want to buy BUT can not qualify. Result Supply exceeds Demand. Wrap your mind around this and you can see the POTENTIAL impact on the Stock market.
An additional problem, that I see, is the huge number of people that have their money that represents their retirement tied up in Stocks. The Majority of these people do not understand the risk of the Stock Market because of what they have been told for years is that you need to invest your savings in stocks to keep up with inflation. For most this advise has proven correct even adding when looking at the history of the big break that occurred in 87’ and then a small break in 2008 that recovered in March of 2009.
OK, you may be thinking why do I see this as a problem. This is the problem I see people that went through the big break of 87’. and the recent move from 2008 to March 2009 have been “conditioned” to ignore the meaning of the these steep declines. So these people are likely to hold their stocks believing, in time, the market will recover, based on their knowledge of history. So a large % of Stock inventory will not hit the market, but just watch their hard earned money decline. Much like we have seen the value of our dollar weaken.
I could point the fickle finger of blame at the source, but that serves no purpose.
Good Luck, and it is up to YOU to evaluate your position if you are in the Stock Market. There are many good managers that can place your stocks in quality that out performs the market, but as I said to one of the more respected in this Industry… You are telling me that if there is a major decline in the stock market the stocks you put me in will not fall as far as the indexes? The Stock Market declines, say, 80% but my stocks only drop 78% I am suppose to be happy? The answer is YES that is how the majority see their job.. Put their clients into stocks that out-performs the market.
If we are what we have, and we then we lose what we have, Who then are we?
For those that listen to the "Talking Heads" on most TV Networks let me recomment the book, "Who Moved My Cheese". It will help you better understand the current Stock Market action.
It can be purchased on Amazon by clicking the image below.
It would appear based on the current action of the Stock Market others are seeing the risk of holding Stocks. I am not looking for agreement because when others agree it shows up in the action of the Stock market. I do want to point out something that I have mentioned before. The SIZE of the Stocks held. The number of Stocks held by various individuals, Companies, Mutual Funds, Fund Managers a very long list of those HOLDING Stocks. Compare this size (inventory) to the size of the buying power (demand). When you take time to consider this one small fact.. Supply VS Demand. It makes it easy to understand the problem facing the Stock Market, and that is Supply FAR exceeds Demand. You will remember economics 101.. when Supply exceed Demand prices will fall. Add “fear”. If fear sets in then there is a double impact on prices. Those that want to sell their stocks must sell into a market of buyers that do not want the ownership of the Stock offered. Both the Supply side and Demand side see the risk of Stocks going lower. It could get nasty.
