Stocks’ impressive gains this month are pulling small investors back to the market, reinforcing the rally.
A total of $6.8 billion has flowed into U.S. stock mutual funds in the year’s first three weeks, the most since 2001, according to mutual-fund tracker Lipper.
"The retail investor is clearly a buyer," Eric Johnston, head of U.S. stock trading at Barclays, tells The Wall Street Journal.
Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.
The Standard & Poor’s 500 Index has jumped 5.7 percent so far this year to 1,507.22 around mid-day Wednesday, hitting a five-year high.
Relief over the fiscal cliff deal, the calming of global economic and financial tension and strong U.S. earnings reports are persuading individuals as to the virtue of stocks. The fact that interest rates remain near historic lows doesn’t hurt either.
Investors “bought the CD at 5 percent,” financial planner Lawrence Glazer of Mayflower Advisors in Boston, tells The Journal. “It's come down, and now their choice is to reinvest it at 2 percent or to shift that money to stocks."
Obviously, he thinks stocks are a no-brainer for these clients.
“I just bought some more stock this morning,” Jim Cole, a 52-year-old bank employee in San Francisco, told The New York Times last Friday. “There doesn’t seem to be this swirl of impending doom hanging over the U.S. economy or the world economy looking out six to 12 months.”
Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.
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