I am amazed how many people simply don't understand the stock market...
Stocks are investments
. When one invests, they expect to receive a profit. If they invest and never get the profit out, they haven't seen
anything but a money pit. What this means is that many investors are cashing in on the record stock values
that we have been seeing.
Now, what, I wonder, are they going to do with all that money? Well, some is going to Christmas celebrations, I would wager.
According to Bank of America Merrill Lynch, redemptions from equities funds and ETFs totaled $14.5 billion, the fourth largest on record, and the
biggest since August, 2014, just weeks after
Equities are typically a part of retirement accounts. Oh, how DARE those rich little old ladies living on a fixed income expect their profit from
Secondly, notice the prices haven't dropped much despite the cashing out. That means that it's actually a little lucky for the stock market that the
money was cashed out, or we'd be looking at over 30,000 for a DJIA! That's how the market works... as the prices go up, more people sell reducing the
prices. As the prices drop, more people buy, slowing the decline.
Thirdly, not all investment is in the stock market. Large sums drawn out can also mean multiple entrepreneurs are anticipating start-ups. Someone
actually funds businesses leading up to their IPO. That means that the market will likely actually broaden in the near future.
Fourthly, notice how the cash flow into the stock market is still positive
Fifthly, notice how low cash flows from bonds have become? That's because bonds are low-risk, low-reward, typically favored for times when stocks or
new enterprises are too risky. Except for a single year-end blip, the market flows are exactly what one would see when a stagnant, struggling economy
transforms itself into a vibrant, growing one.
I certainly will not be looking to CNBC or MSN for financial advice after reading this. Thank you OP, for letting me know who not to listen to.