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 Over $300 billion has been withdrawn from actively managed equity mutual funds since the market bottomed in March of 2009(The S&P 500 is up 115% since then).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.