Who Is The Sucker? There is an old adage that if you are in a game for an hour or so and you look around the room and don't see who the sucker is, its you. I've been looking around the room and I don't know who the sucker might be. Is it me? Tha American Association of Individual Investors (AAII) reports that it's last investor survey shows that 56% of its members believe the market will be higher 6 months from now. I am a member of AAII and I would have responded the same way. What does that mean? In a recent article in Energy and Capital, Nick Hodge writes "Unless you run a mutual or hedge fund or otherwise have access to the advantages of institutional buying, You are the dumb money." Both the Wall Street Journal and Barrons report that the dumb money has returned to the market. I guess that means us. Perhaps they are right but I never left. Further, I am not leaving.
Am I The Sucker? Maybe so but I'm not the biggest sucker? The biggest sucker group left the market at the bottom because they could no longer stand the pain. That was pretty close to the exact bottom of the market. The next biggest sucker group believe they can predict where the market is going. That includes those who believe that a complex software program written by a bunch of MIT graduate students can tell you when to unload your over-priced stocks on a bunch of suckers and run like a rabbit out of there. Many have tried at that game and failed.
Does That Mean I Believe We Are Still In a Bull Market. I will admit that it isn't a good idea to pull out all the stops and buy a aggressively. There are a lot of factors that we all need to be aware of. The Energy and Capital article points out some facts that should give us pause.
1. The cost of providing food for 6.9 billion people continues to rise.
2. There are water shortages currently affecting 2 billion people.
3. The American consumer lifestyle is not sustainable nor is the debt it has created.
4. The price of oil is rising and it is inevitable that we will some day have to find other sources.
5. Our military/industrial complex is too large.
6. American labor cannot compete with the BRIC nations.
7. Too many Americans depend on the government for benefits that they have been promised but will not be able to collect because the government lacks the ability to pay. (Added by me).
How Is That For Pessimism. I don't mean to tell you to jump into cash but you really do need to monitor these things and use caution in your investment policy. This is a time to stay vigilant, cut your living expenses, and invest with extreme caution.
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