the individual investor is not buying the new bull market

December 5,2006

Hello,



IRA Contribution Limits

YEAR
AGE 49 & BELOW AGE 50 & ABOVE

2002-2004
$3,000 $3,500

2005
$4,000 $4,500

2006-2007
$4,000 $5,000

2008
$5,000 $6,000






Is the retail investor missing the boat? It appears that if mutual fund out flows are any indication the individual investor is not buying the new bull market. Some would say that the retail investor is not buying the bull. Perhaps the market isn’t up enough to encourage buying? I would suggest that the resistance of the retail investor to commit funds is a very bullish signal and further evidence of new bull market rally. The individual investor is still smarting over the pounding they took in March of 2000 and I can’t say I am not smarting myself. The 2000 meltdown or bubble bursting is for most investors a once in a life time event. The last time prior to 2000 was 71 years earlier in 1929.



So the news is out that European Companies have been gaining an ever large percentage of exports to developing countries. For many of you a light went off in your head: now it makes some sense why European stock markets have out performed in the face of higher interest rates and stagnant local economies with shrinking populations, high unemployment and large entitlement costs. For years some European economies like Germany and Italy have been known as export machines deriving a significant portion of there GDP’s from exports. The latest data runs counter to what many had suspected given the strength of the Euro. EU economist have worried for some time that a stronger Euro would make EU exports uncompetitive. My theory is a bit different, frequent readers of this blog are aware that I often view the EU as the weaker and most trouble some of the worlds economic trading blocks .There are however some very first rate companies in the EU. Many of them particularly some of the Spanish banks and Telecoms have used the strong Euro to buy assets in emerging markets and as these markets prosper so does the EU.



James

www.jamesfoytlin.com