Crisis In Confidence

November 1, 2012 12:09:00 PM

Only thing we have to fear is fear itself. - Franklin D. Roosevelt

I have spent a lot of time in the last six months (let alone last three years!) trying to convince many investors that the world is not going to end.

I continually explain it is their (investors) fear that creates the tremendous opportunities to take advantage of investing in companies on sale!

As I have said many times before, the stock market is probably the greatest tool available for investors to take advantage of INVESTING in companies on sale!

How Do I Know Investors Are Fearful?

That's an easy question!

As you can see by the chart below, as of January 1, 2009 there has been a net out-flow of roughly $318B from equities and a net in-flow of $845B into bonds. This doesn't even taken into account the over $2.5T still sitting in cash!

Ironically, more funds continue to move into bonds and out of equities while the stock market continues to move higher!

For those who have followed my blogs for a while, it should come as no surprise that I am far more bullish on owning equities today than owning bonds.

However, that being said, it is the smart investors who continue to strategically cost average into quality companies over time and do so by taking advantage of buying companies on sale when others do not want to invest!

As the chart below indicates, as interest rates sit at historical lows, there is no better example of why I believe it is important to go against the herd mentality.

I continue to believe we are in the midst of a longer term bullish stock market and that there are many companies today on sale for the patient investor!

Just think, what would happen if stock in-flows and bond out-flows started...

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Mark Pearson

Mark Pearson

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