More "I Will Never Buy Stocks Again"

CNNMoney ran an article with some statistics about how a preponderance of people surveyed will never buy stocks again. The comments I read at the bottom of the post angrily decried the extent to which the stock market is a scam for various reasons.

There are two things at work here. The first and perhaps less interesting is that people need to save money and get some sort of return on that money. Stocks have usually provided an adequate and competitive return versus other types of investments but that has been put to the test over the last eleven years. If equities offer something akin to a normal return over the some lengthy time period relevant to you, even if this continues to mean more foreign exposure, then less equity exposure will simply require saving more to have a chance of having enough when you need it.

Probably not surprising, I think there is an argument in here for narrower exposure in the equity portfolio. If US equities continue to do relatively poorly along with Western Europe and Japan then investors will need to own other countries. If the financial crisis has lingering effects that last for years (as I think will be the case) then investors (those preferring not to use individual stocks) will need to seek out funds that are not heavy in financials. For that matter how long will the tech wreck continue to plague big technology companies?

To the extent this logic makes sense then that leaves country, thematic and sector funds to build the portfolio--for people willing and able to spend the time.

The more interesting point could be the anger embedded in the comments. They seem to focus on the rich getting richer at the expense of the poor and how markets are rigged and the rich are all in on it. Based on the comments the resentment runs deep, obviously there is no way to know how representative this sentiment is but we all know it exists. I've made several mentions of my friend on Facebook in the "resentment camp" and he has since de-friended me.

We know that there have always been people who cheat one way or another and hopefully we realize that there will always be people who cheat and by cheat I mean break the law. I would imagine that the amount of people cheating ebbs and flows and I would have no idea whether there are now a lot of cheaters or just a few on a historical basis.

None of that changes the truthism mentioned above; people need to save money and get some sort of return on that money. In a way, if you already know there are cheaters participating in the markets then you would seem to have at least one thing in your corner. If you have one thing then maybe you have more than one thing in your corner.

Market cheaters will not prevent some list of countries available in ETF form from having very good returns over the next five years, nor will cheaters prevent some other countries available in ETF form from having lousy returns over the next five years. If agriculture turns out to be what I think it will be over the next few years then the role cheaters might play will have no long term effect. Looking back, you have no idea if cheaters have ever impacted your holdings unless the cheaters were caught and while I have no idea how many cheaters there are I don't think anyone believes most of them are getting caught.

The historical argument for buying equities, which to repeat was alive and well in the 2000s in other markets, was built with cheaters in there the whole time. There is no defending it, it is unfair when cheaters prosper without getting caught but it happens and markets go up and down all the same and none of this changes the fact that the less you have in equities the higher the savings rate needs to be.

The picture is the latest in the trend of college football fields that are not green. First, I believe, was the smurf turn at Boise State, then the inferno at Eastern Washington and now the above at Central Arkansas.