Mom and Pop Aren’t the Ones Getting Suckered by FOMO
With many Americans focused on capital preservation, investment flows are no longer motivated by the chase for performance.
If there are buyers who feel compelled to pile in to stocks at this time, they don’t include retail investors.
Photographer: MCCAIG/iStockphoto via Getty Images
The current bull market is historic. According to Goldman Sachs Group Inc., it’s been 10.7 years since the last 20% correction, the longest such run in more than 120 years. In 2019 alone, the S&P 500 Index has surged more than 25%, with recent gains being attributed in part to investors chasing performance as trade optimism lifted the market. Many on Wall Street use the acronyms FOMO (fear of missing out) and TINA (there is no alternative) to explain it.
But if there are buyers who feel compelled to pile in to stocks at this time, they don’t include retail investors. In fact, when it comes to this group — and it’s a big one — the opposite is happening. According to Refinitiv Lipper, individual investors are slated to withdraw more than $135 billion from equity mutual funds and exchange-traded funds this year, the most since they started keeping records in 1992. Meanwhile, bond mutual funds and ETFs should see record inflows of over $250 billion this year. Why aren’t these investors chasing good performance?