NEW YORK -- Amid the gyrations on Wall Street the past few weeks, one critical constituency has been noticeably absent: individual investors.
Already a hard sell in the weak economy, stocks have become even less attractive to Americans who hear news daily about terrorism alerts, layoffs and bleak business forecasts.
Instead of relying on earnings or profit forecasts, investors are being guided by fear.
"My gut feeling is to wait until the end of the year and maybe think about buying something in January," said Barbara Eng, a New York-area public relations consultant, who hasn't made any major changes in her portfolio this fall, and believes that other investors share her reluctance.
"People aren't going to be willing to part with their money because they don't know if they're going to have jobs," she said. "People are sitting tight and re-evaluating their lives right now and aren't going to be making any unnecessary expenditures."
Financial advisers and analysts across the country are hearing similar statements from their clients. They say the unrelenting wave of bad news has many investors thinking more than twice before making big stock commitments.
"It's the hedge funds and mutual funds with a shorter-term outlook that are taking advantage of the market weakness to step in and buy stocks they think are oversold," said Bill Barker, investment consultant at RBC Dain Rauscher. "Individual investor confidence is coming back slowly, but I don't think individual investors have really stepped up to the plate yet."
This past week alone, the market absorbed the worst consumer sentiment readings in 7 1/2 years and the nation's highest unemployment figures in more than two decades. Although stocks sold off early in the week, by Friday bargain hunters helped stabilize the market.
Much of the selling was attributed to mutual funds, whose fiscal year ended Oct. 31. Still, there were doubts the market would succeed with any sustainable advance, at least in the short term.
"One of the drivers of people's behavior are their expectations about the future and about their own circumstances," said Will Braman, chief investment officer of John Hancock Funds. "Because of the recent experiences in this country and the economic data, the expectations about the current environment and future are pretty dim."
That's not to say individual buyers aren't participating in the market. Rather, their moves have become more restrained with money going into more conservative bonds or just staying in money market accounts.
Brainerd Dispatch ©2013. All Rights Reserved.