The Final Warning: Individual Investors Piling Into Stocks, Market Leverage Hits All Time Highs
Mac Slavo
July 14th, 2014
SHTFplan.com
The story goes that in the Winter of 1928 Joe Kennedy, father of President John F. Kennedy, went to have his shoes shined. When the shoe shine boy finished he offered Kennedy a tip. “Buy Hindeburg,” he said.
Kennedy promptly sold off all of his stock holdings. Within a year the United States saw a massive stock market crash that wiped out the life savings of millions of Americans and ushered in a decade’s long Great Depression.
When asked why he sold all his stocks Kennedy replied, “You know it’s time to sell when shoeshine boys give you stock tips. This bull market is over.”
Throughout history there have always been critical warning signs in the midst of financial exuberance that signaled the bursting of the bubble.
According to a report from Bloomberg the warning siren may have just gone off again.
Individuals Pile Into Stocks as Pros Say Bull Is Spent…
Main Street and Wall Street are moving in opposite directions.
Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months…
…
“If Wall Street, after poring over all known data, comes up with a target and we’re already there, and you still see individual investors buying and they’re typically the ones that are late to the party, it would seem there is limited upside,”
…
“As institutional investors, we’re always concerned when the retail investor is actually arriving in the market,” Skiming, who helps manage $10 billion at Ashburton, said by telephone from Jersey, the Channel Islands. “The retail investor arrives when they can only see blue skies.”
The Rest…HERE
But that’s not the worst of it.
Here’s the kicker, and it’s one that could potentially lead to massive losses for all of these folks piling into stocks and exchange traded funds.
According to market veterans, average investors are heavily leveraged right now. That means they are actually borrowing money to buy more stocks in the hopes of making huge gains, an effect that could lead to extreme stock market volatility very soon.
