For The Average Investor, The Next Bear Market Will Likely Be The Last
Just recently Anna-Louise Jackson published an interesting article asking if “The Financial Crisis” still haunted your investing. To wit:
“This month marks the 10-year anniversary of the current bull market’s beginnings. Yet, many Americans remain reluctant to invest in the stock market, a scary hangover from the 2007-09 recession.
From October 2007 to March 2009, the S&P 500 plummeted nearly 57% and it took more than five years for the index to recover. But the share of Americans with money invested in the stock market still hasn’t returned to pre-recession levels, according to various studies.
In 2018, a Gallup Poll survey found 55% of respondents were invested in stocks or stock funds, either personally or jointly with a spouse, down from 65% in 2007. Among those younger than 35, the drop-off is especially pronounced: An average of 38% of the youngest Americans owned stocks from 2008 to 2018, down from 52% in the 2006-2007 period.”
The rest of the article is the typical pedestrian advice of accepting that bear markets happen, ride it out, and hope for the best.
What Anna missed was the most crucial aspect of what is happening to the relationship between individuals and Wall Street.
The Loss Of “Trust”
A surprising number of Americans who have financial advisors don’t trust them to act in their best interests. In a 2016 poll by the American Association of Individual Investors (AAII), 65% of respondents said they mistrust the financial services industry to some degree. In fact, only 2% of respondents claim to trust financial professionals “a lot,” while 15% say they trust them “a little.”
It isn’t just the “Baby boomer” generation who have “lost trust,” but the up and coming millennial generation as well.