Investors are highly unlikely to turn into the “lost generation” following the Great Depression, Charles Rotblut, vice president with the American Association of Individual Investors, tells the San Francisco Chronicle. Certainly, it is remarkable that investors have pulled $175 billion from U.S. stock funds and placed $496 billion into bond funds since the financial crisis started in September 2008.
Nonethless, consumer staples stocks and slow-but-steady growth by U.S. corporations will continue to buoy the markets and the economy, slowly attracting investors in their wake, Rotblut said.
“Some investors feel the odds are stacked against them. When you see things like the Flash Crash, it erodes confidence,” Rotblut said. “Others are taking in it stride. They realize the stock market is the best vehicle for building wealth long term.
“The big problem is it’s going to take us a lot of time to get back to stronger economic growth,” he continued. “That’s what makes it so tough for socks. We’re in a period of sustained, slow economic growth. It’s going to be tough for corporations to maintain a high rate of earnings growth.”
Rotblut recommends less economically sensitive stocks, such as consumer staples, food and, cautiously, healthcare.”