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Ordinary Americans are losing faith in stocks

Investors » If pullback continues, implications for the economy, living standards are could be big.



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And if America’s obsession with stocks is over, some excesses associated with it might fade, too.

Maybe more graduates from top colleges will look to other industries besides Wall Street for careers. Of every 100 members of the Harvard undergraduate Class of 2008 who got jobs after graduation, 28 went into financial services, such as helping run mutual funds or hedge funds, according to a March study by two professors at the university’s business school. The average for classes four decades ago was six out of 100.

At a glance

Investment facts

Since 2007, individual investors have pulled at least $380 billion from U.S. stock funds.

Individuals have put more than $1 trillion into bond mutual funds alone since April 2007.

Foreigners, big purchasers in recent years, have sold $16 billion in the 12 months through September.

Public pension funds have cut stocks from 71 percent of their holdings before the recession to 66 percent last year.

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Of course, those counting the small investor out could be wrong.

Three years after that BusinessWeek story on the "death of equities" ran, in 1982, one of the greatest multiyear stock climbs in history began as the little guys shed their fear and started buying. And so they will surely do again, the bulls argue, and stock prices will really rocket.

Neitlich, the executive coach, has his doubts.

Instead of using extra cash to buy stocks, he is buying houses near his home in Sarasota, Fla., and renting them. He says he prefers real estate because it’s local and is something he can "control." He says stocks make up 12 percent his $800,000 investment portfolio, down from nearly 100 percent a few years ago.

After the dot-com crash, it seemed as if "things would turn around. Now, I don’t know," Neitlich says. "The risks are bigger than before."




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