I was thinking over some of the changes that have taken place over the past year or two. There has been a fundamental shift in investors attitudes, habits and psychology,
- It doesn’t seem that long ago that you could have gotten 4-5% on a savings account. Now the best savings and money market accounts are yielding under 2%.
- Credit was free flowing and companies like Capital One (COF) were mailing blank check loans to consumers hoping that they would spend, spend, spend. Now credit is much tougher to come by.
- Oil was supposed to crack the $150 barrier by 2009. Oil now trades for almost half that value and was trading in the 50’s for much of 2009.
- The greatest asset that most people have would decline in value. We were led to believe that home prices would only rise and could never decline. Homes were used as ATM machines to finance everything from vacations to car purchases.
- As a nation we would change our consuming habits and becoming savers again. Personal savings rates for individuals changed from a negative .1% to a positive 6%.
- The stock market would bottom out and hit a generational low in March 2009. The market rebounded and increased over 20% for 2009 but investors still have net losses of 6 billion dollars.