tag:blogger.com,1999:blog-816559531110064247.post7572459668052694094..comments2024-03-08T01:03:44.522-08:00Comments on Humble Student of the Markets: Can the public be apathetic AND be all-in on stocks?Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-816559531110064247.post-20646063659348563852014-10-03T07:03:21.129-07:002014-10-03T07:03:21.129-07:00You guys are all trying to change the subject. The...You guys are all trying to change the subject. The post was about whether the US individual investor is fully invested.<br /><br />There is and can be no doubt other sources of demand for US equities - institutions, hedged funds, foreign demand and from demographic change. How much of that is going to matter in the next 6-12 months?<br /><br />Institutions - maybe, but with the rally in the last few years, a lot of defined benefit plans are either fully funded or getting nearly fully funded. They more likely to sell equities and buy bonds in order to fix their funding costs.<br /><br />HFs - who knows<br /><br />Foreign individuals - It`s unlikely that the demand is going to be all that large at the margin. Imagine that an American believed that the UK market (a relatively familiar market) is a screaming buy, what do you have to do to set up a brokerage account in a different currency, in order to transact in GBP. How well do you know the names in the UK market? Take a typical UK company like Smith & Nephew, how many Americans even know what it does, never mind the company and its prospects? All good questions.<br /><br />Bottom line: Don't count on additional demand from US households for equities in the immediate future. Other sources of demand require greater analysis.<br />Cam Hui, CFAhttps://www.blogger.com/profile/09672203690656029787noreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-48431389244960906752014-10-02T19:18:49.425-07:002014-10-02T19:18:49.425-07:00Hi Cam, I must confess that Andrew has a point. I...Hi Cam, I must confess that Andrew has a point. I have been thinking along those lines for the past few months.<br /><br />The US has it's problems, however, it's still the best looking house in an ugly neighborhood. I can easily foresee why folks from other places may want to invest in the US (or simply escape from where they are). <br /><br />(1) Europe is in death/deflationary spiral and EU is quickly moving towards confiscating wealth through taxation.<br /><br />(2) Japan's debt and inflation are rising fast and 10 Yr JGB's yielding a mere 0.5%.<br /><br />(3) BRICs and Emerging mkt currencies are tumbling and growth slowing.<br /><br />I think the US$, US equities and US bonds can attract a lot of capital from all over the world.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-48144918444174217952014-10-02T07:09:01.113-07:002014-10-02T07:09:01.113-07:00I know demographic trends move very slowly, but I&...I know demographic trends move very slowly, but I've been monitoring wealth transfer from Boomers (assume top 10%) to Millenial kids (assume bottom 90%). Wealth Management firms are targeting these "money in motion," some quite worried since the way their clients conduct business will change a lot (e.g., fully digital engagement by the Millenials vs. person-to-person contact). <br /><br />Assume Boomers are mostly in fixed income type instruments (or at most 20% equities), and once the money gets to the Millenials, it becomes 60/40 (or maybe even 80% equities) ... multiply that by the US$ Trillions that will be transferred in the next 10-20 years, and the bull market could go on very long.<br /><br />Here in Silicon Valley there are lots of self-made wealth (from bottom 90% to top 10% or top 1%) in short 5-10 years. Just look at the asset gathering chart from Wealthfront and you can get a sense that there is fast social mobility happening here.<br /><br />Of course, the rest of California or US is not like Silicon Valley ...WimpyInvestorhttps://www.blogger.com/profile/18148362644880449393noreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-76931588826618569912014-10-01T22:27:58.584-07:002014-10-01T22:27:58.584-07:00Hello Cam, interested in your thoughts if you have...Hello Cam, interested in your thoughts if you have any, on whether debt will continue to fuel the rally through relative prices. For example consider the modified Fed model E/P = R(1-T). This could be at the firm or household level. This may happen as I expect to see a further decline in the 10 year. The alternative bullish scenario to consider is foreign households go all in on US equities. Recent movements in the dollar would support such a hypothesis.Anonymoushttps://www.blogger.com/profile/16881656697838162399noreply@blogger.com