December 12, 2012

Many a Wall Street Guru has opined that the American public has simply given up on stocks. To make their case, they point to low trading volumes, as well as the $440 billion that investors have removed from stock mutual funds since the stock market crash of 2008. However, a recent article in The New York Times reveals the bigger picture that equities are far from dead.

Currently, investors have over $5.7 trillion invested in stock mutual funds. This figure is more than the total amount of money investors have in bonds and money markets, combined. Investors have an additional $880 billion invested in stock-centric exchange-traded funds. These numbers show that, while investors have not forgotten the plunge of 2008, they prefer the stock market to alternative investment opportunities.

Treasury bonds, for example, are currently paying an interest rate less than the annual rate of inflation. The interest rates currently being offered on certificates of deposit average .8 percent, and the payout from money market accounts is even less. Many investors are driven to equities because they believe that equities are their best option for a comfortable retirement. According to Adam B. Scott of Argyle Capital Partners, “if your time frame is 10 years or more, you’re better off in stocks.”