Going For the Easy Money

Morrie: I've been looking all over for you
Jimmy: How are you? Merry Christmas
Morrie: Listen, I need the money
Jimmy: Morrie, relax, okay? It's Christmas - "Jimmy, I need the money"
Morrie: I'm relaxing, I need the money
Morrie (to Henry): I did what I had to do. I need the money
Henry: Not tonight, Morrie
Morrie: Listen, I did my caper. He owes me. Everybody's flashing the stuff
Scene from "Goodfellas"

Based on true events, "Goodfellas" is one of the best gangster flicks in history. There's one character, Morrie Kessler, who gets insider details that lead to the biggest heist in the history of New York-the Lufthansa heist. Morrie was mostly a degenerate gambler and no match for his gangster companions who refused to share the loot and eventually stick the heist mastermind with an ice pick through the back of the head.
There are several morals to the story, including the fact that most robberies with lots of participants (read: more than one person) are eventually found out. Another cautionary tale is about running with the wrong crowd and going for the easy money. That brings us to three big news events this week. Two are huge bank robberies and the other is possibly individual investors warming up to the stock market.

The Capers

Twice this week, there was big news about big robberies and big arrests. Yesterday, it was a crime called one of the biggest bank heist in history. It was actually two banks based in the Middle East and automated teller machines around the world. Apparently, the processing was manipulated so ATMs could be used over and over again. The crime was committed on two separate days in December of last year and February of this year. In the end, the numbers were mindboggling.

> 40,500 ATM withdrawals
> 27 countries
> $45,000,000

Yesterday, authorities announced they've arrested seven of the participants in the cyber bank heist in New York City where in one day $400,000 was stolen in three hours from 140 ATM machines, and the next time, $2.4 million was snatched from 3,000 ATMs over a ten hour period. One suspect was already murdered in the Dominican Republic-not sure if his name was Morrie.

Three months ago the most brazen of heists was pulled off by criminals wearing police uniforms that boarded an airplane and took $50.0 million in diamonds. After a three nation sweep 31 suspects were arrested in Belgium where the heist was committed. Authorities think there are 50 suspects, of which half are known criminals.

So a quasi-modern heist using cyberspace and an old-school heist using chutzpah and guile were both solved in about the same period of time. In both cases, I bet the idea of jumping in was too much to resist-it seemed like easy money. The question now is could the stock market be luring investors with the same attraction? Is it easy money that's too much to resist any further?

Warming Up to Jumping In

It was only a month ago, but individual-investor stock market sentiment plunged to its lowest point since March 5, 2009 (19.3 versus 18.92), suggesting Main Street had zero trust in the rally. The thing is the market was up 8,000 points between those two dates making the news something of a head-scratcher. Since then, individual investors seem to be having a change of heart as the reading has soared to 40.73. This isn't the highest level of the year but displays a swift change of heart.

We're a long way from investors becoming rabid about the market, but the turn is beginning. The last big-time bull market began on October 9, 2002, when individual investor sentiment was 35.2 after drifting for a couple of years. Only after the market gained some traction, but never any hype (that was reserved for the housing market), did investors begin to feel jubilant. By June 22, 2004, the reading hit 69.5 but did mark the top ... unless you consider three and a half years early an accurate barometer.

Money Flowing in Wrong Direction

I'm hearing small investors are coming back. While there's plenty of anecdotal evidence, the hard data shows money mostly flowing into some kind of bond fund, and when it comes to equities, world funds are more popular.