Sitting Out Stocks

"The mother of all evils is speculation--leveraged debt."
--Gordon Gekko (Wall Street: Money Never Sleeps)

Years ago I remember my uncle telling me that he would not buy stocks. Stock markets are too risky and perhaps even rigged, he said. Of course, he was born in the 1920s and likely had vivid memories of The Crash and Great Depression. And, of course, WWII.

Many from his generation had similar attitudes toward equities after those terrible economic experiences were seared into their memories.

It is easy to scoff at people from the "Greatest Generation" as being too risk averse. Many sat on the sidelines while the biggest bull market in history unfolded before their eyes.

Funny thing is that my uncle and others of his ilk have done just fine without large stock market exposure. They saved heavily. Now in retirement, they live comfortably from those savings.

In fact, it can be argued that many of today's investors are carrying too much risk. They have not saved enough. As such, they hope that positions in stocks and bonds, often leveraged, will appreciate enough to compensate for their lack of savings.

There is also a growing demographic that once again is shunning stocks--presumably after being burned too many times in the last 10-15 yrs. Even with market indexes hitting all time highs, many of these people have ignored the siren sound of higher stock prices.

As likely occured the 1930s, 1940s, and 1950s, many market pundits are waiting for these people to come back into stocks, and propose that this prodigal return to equities will propel markets much higher.

But this group may not ever be back.

Stock markets went up big (and down big) while my uncle and others of his time sat on the sidelines.

Why should it be different if a new group decides to sit this one out?

position in SPX