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We’ve Seen this Movie

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ej photoRetirement investors are piling back into stocks, a bit late I’d point out. Stocks accounted for 67% of employees’ new contributions into retirement portfolios in March according to Aon Hewitt. Let’s not forget that we’ve seen this movie before, as the WSJ points out here:

Individual investors, notorious for mistiming the market, didn’t fare well in the financial downturn. At the stock market’s peak in October 2007, investors put 69% of new 401(k) contributions into stocks, according to Aon Hewitt. The S&P 500 went on to lose 57% of its value by March 2009.

Some financial advisers now worry that retirement investors could be late to the game, pouring into stocks after much of the easy gains have already been had. This year, the S&P 500 is 1.9% higher, but it is 0.4% off its record high hit at the beginning of April. By comparison, in the first four months of last year, the S&P 500 was 11% higher.

Meanwhile, large investors such as pension funds, banks and insurance companies are showing less appetite for risk. Demand for shares of newly public companies has weakened, and utilities, considered safe when economic growth isn’t robust, are the best-performing group this year.

Some individual investors may have largely forgotten the pain from the 2008 downturn, which caused many of them to panic and sell at market lows.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.