This will not end well
Despite whatever you may have heard the average investor has never been more bullish.
Reuters) - Retail investors bought $4.7 billion in stocks on Thursday, the highest level over the past decade, JPMorgan (JPM.N), opens new tab said in a note on Friday.
Retail investors have been trained over the past few decades to "buy the dip". It's always paid off in the past. But then the rule of thumb is also "dumb money" is always wrong.
Conventional wisdom once held that individuals investing in the stock market would flee at the signs of a downturn, earning them the nickname “dumb money,” whereas hedge funds would weather the storm. But in recent weeks, retail investors have accelerated their purchases of US stocks, even as the Wall Street suits headed for the exits.Since President Trump’s tariff announcement in the Rose Garden on April 2, individual investors have poured $30 billion into American stocks and ETFs, according to JPMorgan. And they’re also letting their retirement accounts ride: Vanguard estimated that from April 2 to the middle of the month, 97% of its 401(k) holders did not make trades.
By comparison, hedge funds have sold over $1 trillion more shares than they’ve purchased so far this year, per JPMorgan.
It isn't just hedge funds. Foreign investors are fleeing US assets too.
Deutsche Bank has reported a significant decline in foreign investment in U.S. assets over the past several weeks as President Trump’s tariffs increased. According to George Saravelos, the Head of FX Research at Deutsche Bank, the recent data on U.S. capital inflows is concerning. The bank’s analysis suggests that there has been a marked cessation of foreign investor inflow into U.S. bond and equity markets over the last two months, which could present a challenge to the U.S. dollar, given the country’s twin deficits.
Personally I've recently started selling equities and buying international bonds.
Comments
The eventual impact has yet to be seen!
I don't see any way to avoid massive instability
...across most markets this year. Supply chains will be rocked by cancelled orders and order changes. If shipping stays on schedule, then some ships will sail partially empty on their 30 day cruise to ports in the West. That means empty shelves and delays in factory orders. It will probably take a year or longer to get things back on track. The Spice must must continue to flow no matter what. The trade war disruptions and political instability will result in distortions of costs and demand. However, the underlying economic fundamentals of necessary international trade are slow to change. The US trade war a strategic disruption that will blow up temporary bubbles of investment opportunities. (This assumes that the US does not default on its interest payment to service the national debt. Trump seems to think that the extra tariff fees paid by US consumers could cover this interest payment.)
One investor may see a staggering rise in the price of gold. Another investor will see a massive devaluation of the US dollar.
And both of those things are true. In recent decades, the US has printed more money than it can redeem, because it has burned up ail that money while adding nothing of enduring value to the nation. In these final gambles the US used the money it printed to fight proxy wars, overthrow governments, and spew propaganda globally in order to gain raw 'power' over other nations, power enough to rule them or enslave them, and bend them to its will — using weapons, threats, and military force. The US has not used the money it prints to build a safe and modern infrastructure of enduring public service and value on the continent it occupies. Instead, it polluted and poisoned the land, it privatized and mismanaged its water and natural resources. It has a rudimentary infrastructure, a patched together power grid, mediocre transportation and unaccountable communications. The US has no Plan B for surviving the effects of climate change, and it has stopped pretending that it cares about the fate facing its people.
The US has put none of the vast sums of money it has printed into existence into improving the quality of its people. The People are poorly informed, increasingly illiterate, and politically polarized, unable to help themselves. They have dropped four years from their average lifespan in less than a decade, and each new generation is doing worse than the last.
The US is in a race against time, now. It must decisively use its power to seize global control without delay, because with each passing day. the nation's weapons, authority, allies, and military grow weaker and weaker. The US Federal government presents itself as delusional, and too entrenched to be reformed. I believe that every nation in the world is aware of this. Certainly, none wish to be controlled by the United States.
Amazingly, US leaders have no idea where they stand in the world. They think they have already won all the battles and are poised to rule the world.. Do all empires go insane before the end? At least this time, the Internet will present the World-to-Come with many intimate views of our history and the end of a civilization. Future generations will be able to learn from the events we have lived through and recorded — and hopefully avoid the mistakes we have made because we didn't know our real potential, and never understand our obligation to protect this planet and evolve human awareness.