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MARKET COMMENT
By
Joe Punter never learns. Recent statistics from the Investment Management Association (IMA) show the general public doing what they do best with their stock market savings: chasing performance bandwagons and losing money. Rewind to the top of the tech bubble. According to the IMA, March 2000 saw private investors pour a net £2,869m into seemingly ever-rising unit trusts and OEICS. Three years later and with shares selling 40% cheaper on average, May 2003 witnessed just £742m invested. No doubt due to the sector's then underperformance, retail punters withdrew a net £79m from UK Equity Income funds in March 2000. Fast forward to May 2003 and with income funds having subsequently perked up, the public put back a net £127m into the very same sector. And so it goes on. Corporate bond funds, transformed from strugglers to frontrunners over the past few years, currently account for nearly 60% of net unit trust and OEIC sales. With £1.1b invested, May 2003 was also the best ever month for Premium Bonds, where entertainment value has so often been the winner over financial returns. Of course, the buy-to-let craze continues to encourage new landlords, though there's plenty of anecdotal evidence of trouble ahead there. And alternative 'investments' like forestry plans and bear funds have also emerged. Anything, it seems, but the traditional equity fund for the general public. All in all, most people don't do well in the stock market. Whether it's human nature and the constant desire to make a quick buck, or wanting the relative 'safety' of following the crowd, private investors in general have shown to be reliable contra-indicators over time. The present actions of the hapless Joe Punter are good reasons to be bullish on shares.