Exactly right — I forgot to include the reference to “musical chairs” - but that describes the downside liability in this situation very, very well.
I completely agree that it can happen again. With the economic numbers coming out of Asia, and the lack of confidence in TurboTax Timmy’s “plan” — Yes, we’re primed for another such run. No doubt in my mind.
I’ll go on the record here and say that if we break below 770 on the SP500 soon, we’ll see a BIG downdraft - probably into the mid-600’s - in a matter of a few days, and it will be the result of panic.
If such a downside break happens, investor confidence in the people who keep yammering about “buy and hold” will be forever crushed under the weight of the losses, and it will be more than 10 years before we regain the highs of 2007.
The Boomers are looking at their home equity vanish at the same time their 401k/IRA is plunging in value. At some point, they’re going to break and pull all their money out of the market. Their time horizon (ie, retirement close at hand) does not allow them to get back into this type of market. They’re going to pull their money out and stay out - for the rest of their lives.
As the winds change so changes the set of the sails. You'd think everyone would be in cash (market at o?) and only venture in for a bit of speculation from time to time. The market is above 8 because so many clueless people still have equity positions that could very well deteriorate within the year. Why have they not, at least, shifted into cash funds?