Americans Miss $200 Billion As They Have Abandoned the Stock Market

More than $200 billion worth stock gains have been missed by the Americans, over the last 4 years, as the investors are still haunted by the financial crisis. Since the bull market began in March, 2009, assets in closed-end and exchange traded funds or equity mutual have surged ahead by 85% and is at $5.6 trillion currently. This increase is less than the 94% increase of Standard & Poor’s 500 Index. On the other hand, the proportion of the retirement funds in the stocks plummeted by 0.5 percentage point.

Incidentally, in 2012, the market has registered the biggest gain since 1998; however, the investors are still not convinced about the potential. The financial collapse that took place 4 years ago, incidentally wiped out around $11 trillion in US equity value and record price swings in the equities were experienced after that. The threat of the upcoming fiscal cliff is not helping matters either and the investors are withdrawing money from the market fearing another recession.

The Chief Investment Strategist of Wells Capital Management, James Paulsen correctly analyzed that the biggest liability for the US stock market is the total destruction of confidence for the investors. He added that there are many evidences all over the market which suggest that the recovery is broadening.

On a whole, if compared with the share prices with that of March, 2009, 481 companies are now in a better position than where they were during that time. Incidentally, Standard & Poor’s index covers a total of 500 companies. The Standard & Poor 500 index, itself has gained around 12% in this year, mainly because of the consumer companies and financial stocks. The index is now way ahead of the record low of 676.53 on 9th March, 2009. However, it is still 8.8% behind the record high experienced on 9th October, 2007.

Many economists believe that the damage to the investors is kind of self-inflicted as on a whole, the growth of US is on an improving note. In addition to that, various companies which are dependent on the economic expansion for their earnings have got the biggest rewards over the last few years. Reportedly, most of the money that has been taken out of the equity stocks has been put in the fixed-income investment which gives better security, but returns are also limited.