On The Run {12.17.12}

Folks liked the On the Run column we did the other day, so we'll give it another go.  Here's what I'm thinking today.

Individual investors have a long and storied history of being on the wrong side of the investment equation.  See this history.  March 2000 saw the largest single month influx of money into equity mutual funds just as the market was rolling over into the 2000-2003 bear market.   In March of 2003 just as stocks were ready to skyrocket higher these same investors pulled their money out in the face of what came to be Gulf War II.  More money went into housing in 2007, especially speculative money than any year previous and we know how that turned out.  Since March of "09" when stocks ended possibly their worst period since the Great Depression, investors have followed every step higher by yanking money off the table and putting it into fixed assets.  Most of the money parked in these accounts pay little to no interest.   According to Business Insider and Bank of America these sales have accelerated in the past two weeks.   I think this is going to be wrong longer term and we'll discuss bonds more in depth at a later date.  Stocks on average are up over the past three weeks as well.

On the S&P 500, Dr. Ed Yardeni notes that corporate revenues growth dropped nearly to zero in the just ended third quarter.  Corporate earnings rose to a new record of $25.98.  Yardeni thinks that better global economic growth will boost both revenues and earnings next year if we avoid the fiscal cliff.  If we avoid the whole thing then Yardeni sees economic growth as surprisingly strong.  For what it's worth that kind of economic growth would by my calculations get S&P 500 earnings next year in the $108-1138 range.  We'll also discuss this more in detail sometime early next year.

Guns in the United States.  The tragedy last week in Newton is unspeakable.  It is hard today sending a child off to classes and for me there's the added anxiety of having a bride who works as an aid in one of our local schools. I will leave the pontificating to others.  Instead I'll refer you to the statistical table below found yesterday over  at the UK's Daily Mail.  There's two disclaimers to note.  The first is that I assume these numbers are correct and the article uses the term 12 month period without saying which 12 months it's talking about so I'm making another assumption that these numbers are current.  Having said that  three things stand out to me.  The first is that the number of people shot in a 12 month period here at home far exceeds the number shot at in any 12 month period of our latest wars in Afghanistan and Iraq.  Also the 9,484 deaths in a single 12 month period exceeds the combined death totals of both conflicts.  Finally I'll note that German police fired a total of 95 shots in 2011.