I don’t know whether the number is 99%, 99.5% or 90%. What I do know is that most people don’t want to trade. They don’t want to watch the screens or get caught up in the day-to-day mayhem that is today’s markets. Even a large percentage of people who think they want to trade, when push comes to shove, find out they don’t have the stomach for it.
The financial blogosphere is filled with traders, active managers and professionals who have before them the ability and wherewithal to go short, put on hedges or simply go to cash. If my numbers are correct that is what the vast majority of investors can’t or won’t do. What is our answer for them in this market?
These are the people that have 401(k) plans. These are the people who are trying to save for college. These are the people who are saving for retirement. These are the people who Phil Pearlman notes:
..will hide their quarterly mutual fund statements at the bottom of the mail pile and avoid them like phobics avoid the Brooklyn Bridge.
They are in large degree the 99% that Ezra Klein identifies as:
It’s that 99 percent of Americans sense that the fundamental bargain of our economy — work hard, play by the rules, get ahead — has been broken, and they want to see it restored.
The 99 percent, for lack of a better term, having faced a lost decade for stocks is not looking for a return to the high double-digit returns on domestic equities that we saw in the 1980s and 1990s. They are looking for a return on money market funds that exceeds 0.00%. They are looking for a reasonable return on their investments, because for many of them what is the alternative?
Become an angel investor? Build an apartment building? Load up on canned goods? The 99% have lives, they have jobs, they have kids or parents they need to take care of. They can’t spend their time buying put spreads on the $SPY. That is is simply not an option for the vast majority of Americans.
If you are an active participant in the markets who has profited from (or avoided) the market missteps of the past few years, count yourself lucky. But as Chess writes don’t think you are doing anything other than gambling:
At the end of the day, all we are doing in the stock market is wagering money on outcomes that have yet to be determined. If you insist on spending your time coming up with condescending, pre-packaged responses about how trading is categorically not gambling, then you are already battling demons that will eventually come home to roost. Trading is most certainly gambling, and so is investing for that matter.
There is nothing wrong with trading. Just recognize that most people are playing, out of necessity, a very different game. They are trying to keep their jobs, their health insurance and their 401(k) plans. They aren’t traders. They are just trying to earn a modest return on their hard earned savings. Don’t lose sight that they are the other 99%.
Items mentioned above:
The sorry state of the markets. (The Reformed Broker)
Scenes from the deck of the Titanic. (Phil Pearlman)
Who are the 99%? (Ezra Klein)
This kind of market brings out the worst in traders. (chessNwine)