It’s the End of an Era in Investing

Focus: MARKETS

Howard Gold Image Howard Gold Founder & President, GoldenEgg Investing

In returning to the stock market, investors have mostly avoided individual stocks in favor of funds and ETFs...and that may be the smartest thing we've done in a while, writes MoneyShow's Howard R. Gold, also of The Independent Agenda.

Someone must have sounded an all-clear signal on New Year’s Day, because in January, after five years of fasting and penitence in the bond market, investors poured money into US stocks.

But much of that money probably went into stock funds and exchange traded funds, not individual stocks. Though few stats are available, there are many indications individuals have abandoned individual stocks as their preferred form of equity investing. Remember how people worshipped Cisco Systems (CSCO), Qualcomm (QCOM), and JDS Uniphase (JDSU) back in the 1990s?

Now they’re buying target funds, index funds, and their close cousins, ETFs, instead of individual stocks. With one big, bright red exception, which we’ll get to later, individual stock investors may be a dying breed.

Nothing brought that out more starkly than an article last week in The Wall Street Journal (subscription required), which dealt with the demise of investing clubs, that former pop-culture icon. (Remember the Beardstown ladies?)

Investment clubs flourished in the era of do-it-yourself investing, when every man and woman was their own stock picker. Who needed professional managers when all the data was right at your fingertips?