Author Topic: 1999 again?  (Read 54834 times)


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Re: 1999 again?
« Reply #290 on: September 04, 2020, 10:21:40 AM »
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Re: 1999 again?
« Reply #291 on: September 19, 2020, 05:45:15 AM »
From morningstar:
"By contrast, U.S. equity funds lost $24 billion to outflows in June. While that wasn't as bad as May's
record outflow of $30 billion, it pushed quarterly redemptions to a $72 billion record, surpassing the
previous record of $55 billion set in 2009's first quarter."
Not exactly euphoria.
Who knows but there may be an element of rebalancing. From the lows in 2009 to now, investor allocation to equities went from about 30-35% to 50-55%. From an overall perspective (i spent only a short time on data and the full Morningstar report) the net outflows in Q2 represent around 1 to 1.3% of the increase in value of listed us equities. So investors, in the aggregate, retained about 99% of the rise in market value into the equity market.
FWIW, some expect that baby boomers (who have had lately a historically high exposure to stocks) will eventually become net sellers and maybe they will have an opportunity to unload in a Robinhood market.
Not to be used as a timing tool because this time may be different but the last times that investor allocation to equities was in this high range: around 1970, around 2007 and around 1999. (?)
Fair points.  Where are you seeing investor allocation to equities? The AAII data only goes back to 1987?
Just in case there is some residual interest. This is not an effective timing tool (retail sentiment) but it's interesting to think about who's on the other side of transaction and there are potential conceptual links with the 1999 period.
From Morningstar:
Here's another similar perspective:

i guess the very bright and qualified authors could be questioned using a forest-from-the-trees argument.
They are missing the big picture as their numbers showing what appears to be retail investors leaving in droves is simply reflecting the overall difficulty in keeping up with capital allocation given the incessant (with some volatility) rise in market value of marketable equity securities. There are many ways to use 'official' data to compute this and the author of the next graph has chosen one method which is absolutely different from many others but which, relatively, shows that we're back to 1999, in a way. One way to 'explain' (there are many) is that retail investors and households are, once again, being able to 'see' the value in stocks that hasn't been recognized by the real economy.

It's a great time to be alive (overall) and the future looks bright (mostly) but part of me wished that, as an investor, i'd have come of age in the early 70's.


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Re: 1999 again?
« Reply #292 on: September 19, 2020, 08:34:52 AM »
Where is Hubert getting his data? Or should I say Ned Davis?

Look at equality allocation (red) in 2000 - coming in at over 60%.

Philosophical Economics has it around 52% or so.



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Re: 1999 again?
« Reply #293 on: September 19, 2020, 11:43:02 AM »
^The important part is to have consistent methodology.
Mr. Hulbert's data seems to include direct and indirect ownership.
One can use data from the Federal Reserve Financial Accounts but you have to decide what to include. Some items are straightforward ie direct holdings of corporate and listed equities. You have to decide if indirect ownership through pension assets needs to be accounted for and it can tricky with 'balanced' funds which contain a variable percentage of equity exposure.
Some of these findings come from well done consumer surveys but this would tend to be less precise (although possibly accurate).
On top of that, you may want to adjust for other demographic factors. The US is getting older: median age in 1990:32.9, 2000:35.3 and 2019:38.4. Also, you may want to remember (or ignore) that stock ownership (especially since 1999) is becoming more concentrated in the top 10% and the top 10% of that 10%. Since the GFC, stock ownership (along age and income profile) has significantly decreased for all groups unless you're 65+ or make more than 100K a year. Interestingly(?), in 1999, the middle class held about 25% more wealth than the top 1% and now the top 1% holds 50% more wealth than the middle class (the numbers reported here also involve some reasonable methodological choices about definitions etc). i don't really care about this last part now but i wonder if this has future implications when we-the people eventually start to claim their share of the we-1%.


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Re: 1999 again?
« Reply #294 on: October 23, 2020, 01:39:23 PM »

 Pzena draws an interesting parallel in his 3Q20 commentary. The gist is that value outperforms growth after a recession and after a long long wait we've finally got one.