Americans Miss $200 Billion Abandoning Stocks

Bloomberg News

Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis.

Assets in equity mutual, exchange-traded and closed-end funds increased about 85 percent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor’s 500 Index’s 94 percent advance, according to data compiled by Bloomberg and Morningstar Inc. The proportion of retirement funds in stocks fell about 0.5 percentage point, compared with an average rise of 8.2 percentage points in rallies since 1990.

(snip)

Money has gone to the relative safety of fixed-income investments. Managers who specialize in corporate bonds and Treasuries have received nearly $1 trillion in fresh cash since March 2009, ICI data show. Federal Reserve Chairman Ben S. Bernanke’s zero percent interest-rate policy and the lowest inflation in almost 50 years have helped spur a 29 percent rally in debt securities since Obama’s first term began, according to the Bank of America Merrill Lynch’s U.S. Corporate and Government Index through the third quarter.

(snip)

Even investors who were rewarded by sticking with stocks have had to endure record daily price swings and three so-called corrections of at least 9.9 percent. In August 2011, after S&P stripped the U.S. of its AAA credit rating, the Dow Jones Industrial Average (INDU) alternated between losses and gains of 400 points or more on four consecutive days, the longest streak on record, data compiled by Bloomberg show.

Daily swings in the S&P 500 averaged 1.74 percent in 2008, the most for any year since the Great Depression. The index rose or fell 1.58 percent on average in 2009, the third-biggest year on record for volatility, while 2011’s 1.24 percent average moves made it the seventh-biggest, data compiled by Bloomberg show. Volatility is down to an average daily move of 0.59 percent so far this year, data show.

(snip)

http://www.bloomberg.com/news/2012-12-24/americans-miss-200-billion-abandoning-stocks.html