Killing the small investor

Yesterday at Marylebone railway station, London, I saw a banner poster from Blackrock Investments, urging savers to consider getting out of cash (with the usual perfunctory, statutory warnings about risk).

Yet according to Testosterone Pit (htp: John Ward), the smart money is dumping investments as fast as it can:

“We think it’s a fabulous environment to be selling,” said Leon Black, CEO of PE giant Apollo Global Management. With stock markets having more than doubled since their 2009 lows, average prices for leveraged buyouts have jumped to nine times earnings, he said. His firm had already dumped about $13 billion in assets over the last 15 months. “We’re selling everything that’s not nailed down,” he said.

This reminds me of 1999, when an investment house sent its representatives around to IFA meetings to persuade us to encourage our clients into tech stocks because of the coming second, "super-boom". I smelt a rat and suspected that our mom-and-pop savers were being set up to help large, favoured clients cash out of their positions. 

The stockmarkets (Dow and FTSE) have halved twice since 2000. I had hoped that when the first crash bottomed out (2003) we would be back into a sensible investment environment, and if that had happened I would probably still be in the industry, since I could have squared investment recommendation with my professional conscience. I hadn't reckoned with our wildly irresponsible governments, who flooded the market with cash and created the property bubble, then crashed interest rates and pumped in more cash to support the busted banks.

So, down twice, up twice - and now, possibly, about to go down for the third and final time.

Meanwhile, I have been trying for over a year now to get my MP merely to ask a question in Parliament about the restoration of safe, index-linked investments for ordinary savers. No joy. Apparently we are to be thrown to the wolves.

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