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Disconnected Markets Confound Investors

johninohio Wrote: Aug 18, 2012 2:56 PM
The S&P500 is up 109% since March 2009, up 39% since July 2010, up 29% since Oct 2011 and up 11.4% since Jun 2012. The entire period was one big wall of worry. It was not driven by fundamentals, since fundamentals were awful and still are. This is nothing new: The markets are always looking forward to what the fundamentals will likely be within the next few years. These forecasts are based on knowledge found at or near the individual level at millions of ‘nodes’ (business people who are intimately familiar with their own company, their competitors, suppliers and corporate customers), compared to the data gathering efforts of fund managers at just thousands of nodes. As far as "the smart money" funds losing their butts or under
johninohio Wrote: Aug 18, 2012 2:56 PM
performing while the S&P climbs, that's simply consistent with the history of the past 10 or more years. Very few funds beat the S&P. The lowest risk capital gains investment is an S&P500 index fund. To top it off, index fund fees are miniscule since no high paid managers are involved. But people keep getting conned by the employer/wall street ‘complex’ into putting their 401k money into managed funds.
The current environment for investors is perhaps one of the most confusing that many have ever encountered.  Unpredictable markets now appear to take no cue whatsoever from underlying economic data, and maxims long cherished by traditional money managers are being abandoned in favor of seemingly illogical choices.  We are in a world in which apparently intelligent investors are willing to pay a premium for 10 year Treasury bonds that are almost certain to lose real value if held to maturity. While such an environment is enough to encourage many to cash out completely, we believe that investors should remain focused on...
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