As ephemeral as crowd psychology can be, when the retail investor is paralyzed with fear and revulsion toward stocks, the market enjoys a strong support regardless of the cycles that may be leaning against stocks as long as tight money conditions aren't prevalent - that is about to slowly change. This from my WSJ: "The market's record-breaking spree has raised a new fear in many American households - dread that they are missing out on big gains. So far this year, U.S. stock focused mutual funds - the traditional domain of mom and pop investors - have taken in a net of $33.6 billion, according to Lipper. That is a small reversal compared with the $445 billion that they pulled from domestic stock mutual funds from 2007 through the end of 2012. But many on Wall Street think that trend will likely accelerate in coming months, particularly if the stock rally continues.
So far, most of the gains have been powered by big institutions and professional traders, whose buying helped push the blue chip Dow to a gain of 11% in the first quarter of the year. That rally, which also pushed up the S&P 500 to a record last Thursday, is the best start for the Dow since 1998. Providing some comfort to small investors are fading concerns about the health of the U.S. economy. While growth is far from vibrant, unemployment is falling. Crucially for individual investors, the values of homes - the biggest single investment for most Americans - have started to inch higher. Corporate profits are at record levels, and confidence is rising among consumers and businesses. In mid March, big time stock market strategists at Goldman Sachs Group Inc., Morgan Stanley and other financial firms fueled further optimism by predicting an even higher surge. They cited stimulus policies from central banks around the world and the likelihood of strong profit growth as economies heal." That sounds like a bullish plan to me - buy anything that moves will be my moto going forward.
