Friday, February 22, 2008

The Retail Stomach

It would be interesting to know what the statistics are on retail investor trading these days. The markets may seem volatile these days, with the occasional intraday 200 point swing (cf today), but I don't think they really are, relative to the 300-400 point days we saw back in 2001-3.

For myself, I view the markets with much greater equanimity than I did then. Part of it is I've been actually gainfully employed much longer, but part of it is I'm used to watching them, and have lived through a previous downturn, when, yes, I did a little panic selling.

And how representative am I? Certainly the great cattle drive into mutual funds and then equities and other stuff came after the introduction of the 401k from 1978 forward, and people really got drawn into the markets during the tech boom. So there are millions and millions of people out there who first got into the markets in the last decade or two, but have now ridden a cycle. And it may be a new generation of heroic buy and holder / dollar cost averagers that are tamping volatility like a strong dose of investment lithium.

Of course, those with real foresight exited stocks and started flipping condos. Mhmm.

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