Wednesday, June 27, 2012

Are Individual Investors Fleeing Stocks Like Rats Off A Sinking Ship?

From Jason Zweig at the Wall Street Journal:
A new report from Vanguard Group casts some doubt on the meme that retail investors have been fleeing stocks like rats from a sinking ship.

The report, “How America Saves,” is the latest installment in Vanguard’s annual survey of the more than 3 million Americans who participate in retirement plans administered by the giant fund company.
To be sure, this year’s study (encompassing data from 2011) shows that the proportion of assets in retirement plans invested in stocks fell three percentage points from last year and is down eight points from its peak in 2007. But that still leaves 65% in stocks – versus 17% in cash and 10% each in bonds and balanced funds.

While the financial commentariat would have you believe that retail investors have been yanking their last farthings out of the stock market, the folks in Vanguard’s huge sample of retirement savers still have two-thirds of their money riding on stocks.

The story gets more interesting when you look beyond people’s balances to see what they are doing with the contributions from their current paychecks. Fully 71% of that money is going into stocks, reports Vanguard – up one percentage point from 2010 and three points higher than in 2009.

If this is “the death of equities,” the funeral seems extraordinarily well-attended.

There is something subtle going on beneath the surface, however....MORE 
HT: MarketBeat
Had we seen that "Death of Equities" line earlier in the day Mr. Zweig may have pushed past the SEC's Enforcement honcho to win today's prestiious CLoD.