Don't Join the Stock Market Exodus

The following commentary is from an investment professional with Clear Harbor Asset Management who is a participant in TheStreet's expert contributor program.

Many Americans gave up on the stock market after the 2008 crash, and many more appear to be doing so now that the global debt crisis has sparked another roller-coaster ride on Wall Street. By the end of October, investors had withdrawn over $83 billion from U.S.-based stock mutual funds in 2011-- more than double the withdrawals through the same period last year, according to the Investment Company Institute, a Washington-based trade group. These stock fund outflows -- largely from small investors -- continue a trend that has no precedent in the data, which go back through 1984. It's understandable. The scope of the systemic malfeasance and irresponsibility that has come to light in the world's leading economies is profoundly disturbing, and people who have worked hard, played by the rules and made a positive contribution to society -- and particularly young people entering the work force -- have every reason to be disgusted and outraged by the mess in which we find ourselves. It's always wise to approach everything with a healthy dose of skepticism, but rejecting the stock market outright for most (not all) investors now is a mistake. At a time when governments around the world are poised to monetize their debt burdens by printing money and U.S. Treasury bills are trading at record highs, stocks should be a substantial part of an investment portfolio for anyone that owns assets and seeks to preserve their value and increase it over time. Yes, the S&P 500 has shed nearly a fifth of its value since the Nasdaq Bubble burst in 2000, but as Bloomberg News recently noted, the bellwether stock index actually climbed 66% from March 24, 2000, through Dec. 2 if you give all the companies in the index equal weighting, regardless of their market cap. The value of the S&P is officially calculated by giving more weight to huge companies like Exxon Mobil (XOM) and Apple(AAPL), which recently had a combined market value of nearly $750 billion, and less to smaller companies like Assurant(AIZ) and Windstream(WIN), which were recently worth less than $10 billion combined. Add Comment Tweet 1 2 3 Last » Next › adsonar_placementId=1341527;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=600;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; try { function DM_onSegsAvailable(segs, cust_id) { for (var i=0;i //* Global Functions *// function metadataRegisterNS(ns){ var nsParts = ns.split("."); var root = window; for(var i=0; i Dow Jones S&P 500 NASDAQ 10-Year Note 12,164.58 1,255.99 2,641.26 20.40 Oil * 109.70 UP 14.45 DOWN 2.48 DOWN 8.30 DOWN 0.53 10 Yr 2.04% SPDR Gold 169.32 +0.12% -0.20% -0.31% -2.53% Data delayed 20 minutes Top Stories and Tools var randnum = Math.floor(Math.random() * 100) if (randnum < 50) { document.write("10 Things Still Made in America"); document.write("Dividend Calendar: Find Ex-Dividend Dates"); document.write("Goldman Sachs' 9 Best Stocks for 2012"); document.write("Merrill Lynch's 10 Favorite Stocks for 2012"); document.write("Today's Top-Rated Stocks (by Industry)"); document.write("FREE NEWSLETTER: Dividend & Income Investor"); } else { document.write("10 2011 Cars You Should Buy Now"); document.write("17 Products That Were Invented by Accident"); document.write("9 Completely Worthless Collectibles"); document.write("2011 Bank Ratings and Safety Screener"); document.write("10 Hottest Holiday Gadgets of 2011"); document.write("10 Best Dow Dividend Stocks for 2012"); } Twitter Facebook RSS Mobile App TSCM.ads.AdPlacerx.sz = "336x280,336x850,300x250,468x648"; TSCM.ads.AdPlacerx.resetTargets(); TSCM.ads.AdPlacerx.calltype = "adj"; TSCM.ads.AdPlacerx.additionalTargeting = ";;storytype=investingOpinion;kval=investingOpinion;;storytype=investingOpinion;kval=investingOpinion"; TSCM.ads.AdPlacerx.writeTag(); adsonar_placementId=1341369;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=320;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; Brokerage Partners Free Newsletters from TheStreet

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