The overall stock market is down over the past decade,
while the price of gold has more than quadrupled and corporate bond returns have
doubled. Couple that with the slow economy, and hedge fund managers and
institutional investors continue to shift money away from stocks to investments
they think will be safer.
An estimated $170 billion has been put in bond funds this
year, while $35 billion has been pulled from stock funds, according to the
Investment Company Institute, a trade group for the mutual fund industry.
So much for buy and hold.
The volatility begets more volatility, which further
unnerves investors who have been punished by losses over the last decade. The
total return, including dividend, for the benchmark Standard & Poor's 500
index is down about 11 percent since August 2000, according to Bespoke.
That means an investor who put in $10,000 in an S & P
index fund 10 years ago and held it now has less than $9,000 to show for it.
Billionaire investor George Soros is one of those who
bolted out of stocks in the second quarter. His Soros Fund Management reduced
its stock holdings by about 40 percent to $5.1 billion from April through June,
according to a quarterly report filed Aug. 17 with US securities regulators.
The fund sold 93 percent of its stake in Pfizer and 98 percent of its stake in
Wal-Mart during the quarter.
The fund's biggest holding is an exchange-traded fund in
gold-related stocks. It represents 13 percent of its stock portfolio. The
quarterly report does not detail the fund's holdings outside of stocks, and the
fund declined to comment on its investments.
Other big-name investors with large positions in gold
ETFs include John Paulson, who was made famous for his successful bet that the
subprime mortgage market would blow up.
They are sticking with gold even though prices for the
precious metal are up 9 percent this year to more than $1,200 an ounce. That's
four times the $300 price of an ounce of gold in 2000.
There has been an equally bullish move into government
and corporate bonds. The Federal Reserve has pushed down interest rates to
almost zero to stimulate the economy.
That has spurred a rally in Treasury bonds and notes. The
benchmark 10-year Treasury yield is down to 2.6 percent, its lowest level since
the height of the financial crisis in 2009.
