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Will bull market run over retail investors

Tuesday, November 12, 2013 - 02:17

Nov. 12 - As stocks continue to hit record highs, individual investors may begin to move back in, but does their return signal the end of a bull run. Jeanne Yurman reports.

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U.S. stocks have been notching new record highs all year. The Standard & Poor's 500 Stock Index, the broadest measure of the stock market, is up more than 20 percent so far for 2013. The financial crisis five years ago scarred many retail investors as the plunge in stocks ravaged their investments. But many have paid down debt and have watched home values improve. Increasingly confident and hungry for investment gains, they're edging back into the stock market. $76 billion has poured into U.S. stock mutual funds--a proxy for retail investment activity-this year versus over $450 billion of withdrawals in the last six years. Yet historically retail investors arrive late to a market's bull run and some experts say their return actually may be a key signal that the gains are coming to an end. President of Seabreeze Partners, Doug Kass says in hitting the top of a stock market bubble we're nearing a 10. DOUG KASS, PRESIDENT, SEABREEZE PARTNERS (ENGLISH) SAYING: "I think were probably at an eight but we have to recognize that the stock market will likely begin to discount a bubble-like condition and record a price top in the major indices well before we reach ten." Taking a stock's current price relative to its expected earnings in the next 12 months--or forward PE ratio-equities are trading north of their 10 year average despite a still very lukewarm economy. Nonetheless other market watchers like Chet Helck of Raymond James point to U.S. innovation and still expect stocks can move higher. CHET HELCK, CEO GLOBAL PRIVATE CLIENT GROUP, RAYMOND JAMES (ENGLISH) SAYING: "The markets are back to where they were and maybe slightly above. There will be corrections and yes well go through it but I'm a believer that there are better days ahead." As investors current and prospective debate a market top, one piece of data they can chew on in the meantime: corporate earnings. According to Thomson Reuters they're forecast to grow over eight percent in the fourth quarter.

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Will bull market run over retail investors

Tuesday, November 12, 2013 - 02:17