I’m a huge golf fan. I’m a bigger Ryder Cup fan. So Friday
morning was the start of a golf fan’s “best 3 days”. The TV was on but I was
not tuned in. I had to work. I looked up every once in a while to see how
my American favorites were doing against their European counterparts, and every
time I did something bad was happening to the Americans. I saw
Tiger hit balls into the woods, I saw Furyk “ lip out” putts, so I naturally
assumed we were getting our “collective American butts” kicked in the morning
session. Much to my surprise this was not the case. Americans and
Europeans were tied when the morning session concluded. It occurred to me that this must be how many
individual investors feel about stocks and the stock market.
Research points out that this is exactly the case. Franklin
Templeton surveyed one thousand Americans in 2010, 2011 and 2012, and asked
them how they thought the stock market had finished at the end of the previous
year. For the year 2009, in which the S&P 500’s total return was 26.5%, 66%
of the thousand respondents said that it had been down or flat. For 2010, when
total return was 15.1%, 48% of those surveyed said that it had ended down or
flat. For 2011, the return was 2.1%, and 53% of respondents said that the
market had been down or flat. What’s worse is that, based on these “embedded
impressions” and the continuous negative media drumbeat, these same folks are
likely deferring investments or vacating well thought out financial plans. Over
$300 billion has been withdrawn from actively managed equity mutual funds since
the market bottomed in March of 2009(The S&P 500 is up 115% since then). The money is still trickling out because
when people glance up at the screen it looks like Phil or Tiger missed another putt.
I guess the choice is to pay attention or turn the TV
off.
