"TrimTabs CEO Charles Biderman says fear of what happens after quantitative easing and other interventions run their course is what could be keeping retail investors from hopping aboard the stock market train.
Curiously, investor surveys, such as the one run by the American Association of Individual Investors, have reflected strongly bullish sentiment for going on nine straight weeks. But investors haven't been backing that up with their dollars.
In addition to parking their money in bonds, individuals have plowed $2.3 trillion into savings accounts over the past five years, which is 2.4 times the amount allocated to bonds.
"The bulls dancing to the central bank's music had better stay close to the door so they can exit quickly when their medicine becomes poison and the music stops," Biderman said in his weekly analysis. "While central bankers can print all the money they want, they cannot control where the money goes."
Goldman Sachs was last week charged with investor fraud by America’s financial referee, the Securities and Exchange Commission (SEC).
Wednesday 21st April 2010
The shock announcement rattled nerves across the stock markets, with Goldman’s own share price falling by 13%.
But the bank has come out firing, saying the charges have no basis in fact or law and it will vigorously defend both the firm and its reputation.
The alleged fraud occurred in 2007 – about the time the US housing market was faltering.
The SEC says Goldman Sachs advised two of its clients to accept a US$1 billion bet over sub-prime mortgage bonds that they knew were going to fail.
They say Goldman did not tell the clients that the person they were betting against, John Paulson, had actually fixed the odds in his favour.