Retirees a threat… reading that sounds absurd to me. However, take a moment to think about it. Say I’ve been putting money into my retirement savings for many years and I’m about to retire. The general prescription for retirement accounts is a variety of approved funds, unless you’ve elected to go with a self-directed account. Last I checked most are down by 20% or more for the year.
Imagine being in your late 60′s and watch 20-40%+ of your wealth vanish. Whoa… what do you do?
1) Keep your money invested because you hope the balance will recover
2) Sell to get cash so at least you can survive the future
Regardless you will be selling as time marches on to fund your retirement. As the market continues its descent and people’s frustration and anxiety grows the propensity of panic will grow as well. People aren’t panicking yet. They are anxious, full of anxiety, and want help from the government or at least some accountability. Once the people still holding on just want cash then we will see a capitulation pushing all the indices down further. Will there be bear market rallies… YES! We have already seen many.
The chop over the past couple weeks is forming a bit of a channel as the bears and bulls fight it off. People wanting to enter the market long in hope of hitting the bottom only sell at a loss later when the market continues it primarily downward trend. I’d love to say there will be a major (SUSTAINABLE) rally, but look at all the economic news. Citi laying off 50,000 people worldwide… WOW! If that isn’t yelling recession then umm I don’t know what to say.
Okay let’s pull this all together. Really bad economic news on many fronts all around the world. A large percentage of the US population is about to retire. The retirees are depending on their savings to retire. They face a choice of either holding on until they no longer can if things continue to deteriorate, or getting out now. Either way there is a downward pressure that the bulls will have to push through to rally for any serious amount of time.
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