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Until we see proof of a change in government to punish the corruption we've seen in corporate America, private investors will hang back. The public got robbed, big time, and the government now protects the obvious theives. A shoplifter will be punished more severly than the corporate officers who lied to and stole billions from their 'investors'.

Capitalism depends on strict, verifiable and enforced fidelity. The corporate executives running companies large and small in this country are acting like a bunch of mobsters. There is little evidence to engender investors' trust. There is much evidence to foster the contrary. Corporate executives are openly walking away with tens of millions, while running their companies into the ground. They dont give a damn. And there is no penalty for these men when they commit fraud to steal all the substance from the companies they 'run'.

There was a short period of hope when we were treated to some perp walks, but that faded when we saw the big crooks continue their lives of luxury, untroubled by the distress of the victims or the two-inch arm of the law. So howcome the RICO statutes are not being used to get the obvious perps?

The marquee is glaring: "Want to get robbed? Invest in corporate America!"

People are merely taking notice!

Stock prices go up for only two reasons:

A)a Company is able to produce a good that the public wants and is able to maintain pricing power over that product. i.e. there are legitimate barriers to entry in that market, that cost competitors dearly to get in. Investors generally like these stocks because they show ever increasing earnings, and in most cases spin off enough cash to actually pay a dividend. Example:Exxon has tremendous infrastructure to produce oil, it is very hard to get into that business, and oil is a needed product.

B) Stock prices also go up if "Wall Street" and of course your corner stockbroker can hype you on stocks as a way to get rich, make the big score, retire early, etc. If Wall Street can get enough people jacked up on a stock or stocks, then the demand outstrips the supply, running prices up. This is what we saw in 1998-2000. Too many people crazily chasing to few stocks. The stock market was no different than the beany-baby hype of 5 years ago. The concept is identical.

Right now because of a slow economy (it happens, things run in cycles) and foreign competition, solid companies are having a hard time implementing pricing power to produce significant profits (hence causing their stock prices to rise)

As to factor B, with corporate scandals and the market falling off a cliff, people aren't interested in stocks right now, so there is too little demand and way too much supply of stocks.

IMHO, the market crash has turned off a generation to stock investing, so big run-ups in the market may not return for 5-10 years. We need to solve foreign competition and get the economy rolling again to at least modest stock growth (5-10% a year appreciation)

Until we see proof of a change in government to punish the corruption we've seen in corporate America, private investors will hang back.

Something that is going unnoticed is the irresponsibility of those hawking mutual funds and playing the stock market to people who have neither the brains nor the knowledge to be there.

When I opened my trading account, I got lectured, insulted, by a twerp who said I should put my real savings in a trading account or mutual funds because FDIC insured stuff just doesn't pay enough. When I said I was opening the account for trading knowledge, kind of like a kid playing Monopoly and learning from my mistakes, he got really, really agitated.

Well, so did I. When I questioned him, he didn't know the rule of 72, he couldn't tell me how to actually find a PE or Beta on my own, and got it wrong when I asked him if a stock that goes up 10% one day and down 10% the next would break even (answer: no. Fluctuation is nasty to the bottom line, unless it's skewed upward).

I mean, the guy was an idiot. I complained, but he's still collecting the bucks. Bottom line...my fun account is still fun, and I pulled out the original investment, so I can't lose money.

But there are people who believed "experts" like this. Those people are broke. I wish they could claim the Porsches and mini-mansions these people got off other's misery and susceptibility.