Page 25 - ARUBA TODAY

BUSINESS Monday 18 SepteMber 2017
A25

As stocks set highs, investors still worry about next crash

By STAN CHOE mostly gentle ride upward. boom when day traders years, which means they ing in unison, which helps
AP Business Writer The S&P 500 has already set were bragging about get- look more expensively val- lift profits for the big multi-
NEW YORK (AP) — What is a record more than 30 times ting rich quickly and inves- ued than usual. One mea- national companies that
the sound of a stock mar- dominate U.S. stock index-
ket at a record high and es.The persistent growth of
nobody buying it? the U.S. economy is one of
Even with stocks in the midst two reasons that the Gold-
of one of their best-ever man Sachs strategists gave
runs, investors are on pace in a recent research report
to pull more money out of for why they see a sharp
U.S. stock funds than they downturn for stocks as un-
put in for the third straight likely in the near term. The
year and the eighth in the other: “Investors are not
last 10 years. complacent.” Fund man-
The memory of the financial agers are holding onto
crisis from 2007 into 2009 is about as much cash as
still too fresh for many inves- they usually do — they’d
tors, who watched stock be more fully invested if
prices plunge by more they were more excited —
than half. After many sat and investor dollars flowing
out the ensuing, torrid rise into stock-index funds are
for the market — the Stan- being offset by the dol-
dard & Poor’s 500 index has lars flowing out of actively
more than tripled since hit- managed funds.
ting bottom — they’re now That movement may be
wondering if the next crash due to the increased pop-
is imminent. In this Thursday, Feb. 9, 2017 photo, traders work the floor at the New York Stock Exchange. The ularity of target-date retire-
“It’s still one of the first things stock market is at a record, and no one seems to care. Investors are on pace to pull more money ment funds, which typically
that comes up” when Brian out of U.S. stock funds than they put in for a third straight year, and for the eighth time in the last make big investments in
Jacobsen, chief portfolio decade. That hesitance to buy is actually an encouraging sign to many investors and has some foreign stocks to diversify
strategist at Wells Fargo Wall Street watchers saying stocks can avoid a downturn in the near term. their portfolios.
Funds Management, talks (AP Photo/Mark Lennihan) That’s counter to what
with clients and even some in 2017, with only a few big tors were scrambling to sure popularized by Nobel many mom-and-pop in-
friends. “The question is: down days, due in part to join them. In 1999, investors prize-winner Robert Shiller vestors did when left to
‘When is the bubble going a resurgence in corporate- threw a net $188 billion into says that the S&P 500 is at their own devices. Around
to burst?’ I’ve been hear- profit growth. Companies domestic stock funds. The its most expensive level the world, they’ve histori-
ing that since 2012.” themselves remain big pur- next year, when the S&P since 2001. Not only that, cally been biased toward
Another reason for cau- chasers of U.S. stocks, and 500 peaked, it was nearly but interest rates are ex- stocks from their home
tion: America’s increasingly foreign investors have also $300 billion. pected to rise, which theo- country.q
wrinkled complexion. Baby been buying some. In the years running up to retically should lower how
Boomers may be getting The general skittishness the Great Recession, fewer much investors will pay for
more conservative with about stocks is actually an dollars were heading into each $1 in corporate prof-
their nest eggs and putting encouraging sign to some domestic stock funds than its. Throw in the wild card
more money into bonds as on Wall Street, particularly during the dot-com bub- that is Washington politics,
they approach or move those who follow famed ble, but still more money and investors are feeling
further into retirement. investor John Templeton’s was going into the market unmoored.
Through the first seven maxim that “bull markets than coming out. Now, the Even optimistic analysts are
months of this year, inves- are born on pessimism, tide is in the opposite direc- somewhat circumspect,
tors pulled a net $8 billion grow on skepticism, mature tion. Investors pulled an av- expecting more modest
out of U.S. stock funds. on optimism and die on eu- erage of nearly $24 billion gains than the roughly 14
The figures from the Invest- phoria.” There are indeed out of domestic stock funds percent that the market
ment Company Institute many reasons to worry, the annually from 2008 through has delivered annually the
include index mutual funds market’s high price chief 2016. last five years, on average.
and ETFs, whose popular- among them, but at least Instead of euphoria, strat- But they point to the still-
ity have boomed in recent there doesn’t seem to be egists at Goldman Sachs improving economy, and
years, as well as funds run any euphoria. If all the po- say investors are currently note the typical U.S. house-
by stock pickers looking to tential buyers that remain between skepticism and hold is finally making more
beat the S&P 500 and other get lured into the fold, then optimism. in income than it did at the
indexes. it would be time to get wor- The skeptics have honed in end of the last millennium,
That hesitance to invest ried, the contrarians say. on how stock prices have after adjusting for inflation.
comes even as stocks have To see what euphoria looks risen more quickly than cor- Other economies around
attained new highs in a like, consider the dot-com porate earnings in recent the world are also grow-