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Death of Everyday Investors Overrated

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    Barron’s Mike Santoli breaks down the current state of stock-market investing.

  • Duration 5:08
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OK so we just saw FaceBook -- Robert showed us thanks to the FaceBook IPO mass.

Our equities dead again and for anybody who still left standing to because scurrying away because it scared them.

Well if you read any of the papers today -- -- -- so this is a Wall Street Journal big red word exits.

An about face for investors they're all running away they're turning -- -- Causing flight FaceBook disaster turns into hopes of -- potentially mood -- skepticism and then.

New York Times this -- section today after FaceBook more fear of -- stock market.

But don't start writing those equity eulogies just yet joining us now is another headline maker telling a totally different story.

Parents associate editor Mike -- -- and your time -- brilliant because parents came out this weekend and your headline.

Was saying that these which hadn't even come out yet where were a little bit overstated and anybody who really listeners might miss out on a big rally perhaps talk about the.

Per well actually was preceded by the Financial Times last week with a death of equities kind of -- so yes it's in the there's a lot of talk right now but basically we've turned off the public.

To equity investing for good and -- hinge on FaceBook maybe some people -- -- JPMorgan just a sense that the brought the markets are rigged.

My perspective on it is though first of Altman don't have a long time right for years years and years obviously last five years individual investors have pulled half a trillion dollars out of equities they put it.

A trillion dollars in the bond funds.

They've already been essentially kind of turned off to the stock market so it's not -- It's not about to turn necessarily -- that also doesn't mean it's a bad time to invest you know the moment of maximum optimism.

By the average guy in terms of the market there's a Wall Street what's exactly the wrong time to buy which was early 2000 to right the way these things work.

They -- -- he's kind of generational.

Start showing some some charts because if you look at the past two or three years you will see that just as the -- cat bond trade where everybody piled onto the -- boat started.

Equities actually started moving -- didn't see a really decent -- starting from 2009.

Or 2010 you know look at this you see it move.

And it just gets better and better just as everybody's leaving.

But -- hack into the seventies could you could just go back in history and see the same -- -- have.

In times in the past you know we were used to the idea for especially from the ninety's and before that the eighties when he -- public -- -- -- -- driving the stock -- -- But if you go back into the fifties -- people move when he got it was still mostly professionals market in the -- -- you have that post war boom in the market.

Even in the seventies.

Acting had a 97 -- low in the bear market which really by the way looked a lot like 2002 does rising it received just after seven before started a low everybody goes rushing out same thing goes into bonds and then you see where the stock when people got shaken out again but it seems like you know corporate earnings.

I will in fact actually drive the market even in the absence -- that the little guys money from -- So the numbers one point four trillion.

Of money flowing from stocks into bonds over the past couple of years.

Does anything turn that around -- there's some proverbial switch that can be flipped and if so what would do that with the timing then be to unite I don't know about the switch but what what really might have to happen is you have to have some negative reinforcement for that bond -- -- -- have to have her feel some pain.

For being in bonds in the -- just can't be well the stock markets going up without me so if interest rates -- adorable we got some other credit scare.

That really did impact of higher bond portfolios maybe that's going to be -- -- to get yeah I also do think if the market goes up in a relatively orderly way.

Yes the markets doubled off the bottom in 2009 but people watching from the sidelines say look.

It's been scary in 20102011.

Each year get a fifteen or 20% -- -- -- not on board for that so therefore I think you have to have the market had to approve prolonged period of calm.

-- upward tilt.

Then maybe people get back but it's almost -- -- -- close painting or mosaic where Europe close you don't see anything -- only when you step back a couple of feet or a couple of years and you get to see the real positive move and by the way I only would say that this is a good time if you have that tolerance for a five or ten year time horizon when you can have the average is working your favorite right where they worked against you ten years ago when you had experienced.

Really too -- -- market for too long term what areas look good right now from that perspective.

You know I do actually think that the one area that it's demonstrably on expect -- inexpensive and also relatively neglected.

Is that kind of multinational area that multinational companies.

That seem like -- I you know people joke at -- kind of countries to themselves with armies of their -- of lawyers as opposed to you know soldiers are you really do you think they can withstand.

A lot of the at the macro over and his own daughter of the name SAP which does business in every country possible they've done they've hit record earnings over the worst possible time but that's a good example -- -- -- that exactly I mean I could easily gamed those and it what did you think about -- -- or other companies that are very or are kind of like.

You know the -- of Europe.

Is -- because the domicile in Europe they actually do get punished more because of what's going on there -- the ground in the economy's so you know you Unilever is cheaper than Procter & Gamble even though they're basically the same company just because -- in -- may have been unduly punished -- -- -- toll appearance read the article -- sorry you have to pay for conspiracy fancy -- Smart people kind of thing got to pay for a -- just the last.

Up uptick good to see you might like Iceland might -- sent tele art --

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