You know stocks are overbought when your hairdresser starts giving you investment advice. When everyone started talking about dot-com stocks in the early part of the decade, it was time to get out. When everyone was boasting about fat profits from flipping condos in Las Vegas, the bubble was obvious.
In the last few days, I've heard from several people, both sophisticated investors and 401k participants alike, talking about how much they hate equities. All of them have stopped making new contributions, and many have switched their portfolio entirely to cash and bonds over the last few months. People have started volunteering information about how much their portfolio lost before they capitulated. Not what you expect to hear from a complete stranger in the seat next to me on a recent flight.
I don't expect that things will turn around tomorrow, but if retail investor sentiment is any guide, 2009 will mark the low point in the market.
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