Stock Market: Better Late Than Never

It looks like the masses are coming back to the stock market. Reuters reports that "investors in U.S.-based mutual funds poured $14.82 billion into stock funds in the week ended January 9, a record according to weekly data that extends back to the start of 2007" (reuters). And the Wall Street Journal writes that "in the last two weeks, investors sank $11.3 billion into global stock mutual funds, excluding exchange-traded funds" (wsj.com).

Something is changing. Since the stock market crashes in the year 2008 and in early 2009 the masses - called "mainstreet" - had avoided the stock market like the devil abstains holy water (an old German saying): Once bitten twice shy. The panic of 2008 generated a climate of distrust and it seems that it needed 4 years of recovery (since spring 2009) that the masses regain their economic confidence.

I appreciate this comeback, if it really happens. Better late than never. Even so Joe Sixpack missed the rally since spring 2009 - which generated already a return of more than 100% - the returnees (and newcomers) should expect solid gains for the future.

In the long run the stock market participates on the perpetual growth of the global economy and the secular rise of the company profits which translates into average yearly returns of around 7%. The coming years and decades could even be better thanks to the high growth in China and other emerging markets (where more than 6 billion people live) and the accelerating technological progress.

Welcome back mainstreet!