Investors Wisely Regain Skepticism

Here’s an article from MSNBC on how investors are losing faith in the stock market:

The Wall Street insider trading investigation may lead everyday investors — already rattled by a stock market meltdown, a one-day “flash crash” and the Madoff scandal — to finally conclude that the game is rigged.

“A large part of trading has to do with trust, and I don’t have it,” says Mark Swenson, a 43-year-old plumber from New Hampshire who refuses to buy individual stocks.

“When a stock moves up 10 percent, you don’t know why,” he added. “We can pretend that everyone has access to the same information, but they don’t.”

Even before news broke that federal investigators were looking into whether hedge funds traded on inside information, small-time investors were pulling their money out of stocks — despite a remarkable run for the market since the spring of 2009.

Hedge funds are speculative funds which make large bets on market movements and are usually used by wealthy private investors or institutions.

Articles like this are written with a familiar hand-wringing tone. It’s supposed to be self-evident that this “loss of faith” is a bad thing. But from my view, it’s not bad thing at all.

Such articles could easily be reframed as “Good News: Investors Wisely Regain Their Skepticism.”

Posted by on November 29th, 2010 at 1:17 pm

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