In today’s issue:

  • Are investors just passive aggressive investing zombies?
  • The readers have their say on my theory
  • When value investing is out of fashion, it works

Last week’s article generated some serious feedback. It was about a shift in the very meaning of stock market prices. I argued that sellers were now in control.

I was expecting the reader response to be rather critical. Bordering on outright ridicule, even.

I mean, what sort of free market believer claims that sellers determine market prices more than buyers? Isn’t it a basic law of supply and demand that you need both equally to get a price?

It is. But the stock market is not a free market anymore. That’s the real point I was trying to make here.

In a world where we are goaded into investing in stocks via tax incentives and opt-out pensions, you could say the stock market is being subsidised.

No wonder it’s struggling to perform!

It’s feedback like this that helped me realise what I was describing last week…

Hi Nick,

I think you’re on to something there about the way the stock market moves these days. Most retail investors are passive investors through pensions and managed funds, and have little or no say/control/knowledge over where their funds are being invested.

I think a major reason why the top tech stocks keep increasing is because the 401k funds are poured into them and other similar S&P500 and Nasdaq stocks every fortnight.

On the other hand, American kids (who can afford to) pour money, via Robinhood and other “investing” apps, into “hot stocks” they’ve heard about and been discussing online. They’re after a quick buck and put money in hoping for an easy profit “casino style”. Only when they get their fingers badly burned will they row back.

In America, particularly, nobody seems too worried about prices right now. They just want to surf the growing wave. Only when it comes crashing down will they see that it was a crazy “ride” that was never going to last.

The FTSE on the other hand has moved slowly upward in comparison, but I suspect a similar trend is happening here. Some stocks (e.g. Rolls-Royce) are “popular” and investors and funds are continuing to invest in them even as the share price continues to climb.

Keep up the good work. Your articles are always interesting to read and food for thought.



Momentum investing has a lot of credibility in the financial community. Partly because it works in falling markets too.

But as I explained here, it’s extremely rare for investors to profit from a boom and a bust. They tend to be a believer or a sceptic from the outset. And that gets them into trouble eventually.

This reader added some thoughts to my claim that sellers determine stock market prices because buyers just don’t care anymore.

Good morning Nick,

Another interesting piece this morning, but I feel there may have been a couple of areas untouched in your theory. Firstly if buyers are buying blind and don’t care about price, why hasn’t all this pension money raised the value of the FTSE100 beyond its current mediocre performance? It seems that pension funds must have been investing elsewhere?

Secondly with regard to the buying blind, you made no mention that so much institutional investing these days is not done by stockbrokers or even fund managers, but by computerised algorithms. The trades being made by humans these days tends to be mainly the realm of the derivatives & commonly traders.

But finally are you suggesting that good old fashioned fundamental analysis no longer has a place in the current world of investing or just not in FTSE? The success I have had following James Allen & Sam Volkering’s excellent analysis would suggest otherwise!


I’m suggesting that the analysis of people like James and Sam is the key way to get ahead in markets. In a world of brainless passive investing and algorithms, actually doing the right analysis is what works. It makes you contrarian and sets you apart.

That’s why our investment director John Butler is focusing on how people can use his unique form of analysis in their retirement plans.

As to why the FTSE 100 hasn’t gone up despite the deluge of pension money being contributed and invested, the answer is quite simple. Consider what happens when people retire. Pensions pay out. Which means they sell stocks.

So, the net inflow or outflow from pensions into the stock market depends on demographics. How many retirees are there selling stocks versus workers and savers contributing to pensions and thereby buying stocks?

You’ll find the answer here. But you may not like it.

This reader remembers the way the stock market used to be…

I remember in early 70’s my older colleagues buying shares. It was all about value. Looking for companies listing with potential. Looking at the numbers not the hype.

Then came privatisations, which I think it was when it changed. And then the dot-com boom and the bust cemented the change to emotion, not facts. To where we are today that not so good news can reduce the share price even if company has improved.



These days, bad news can even be good news… for the stock market. It suggests looser monetary policy or more government spending might be in the offing. And who doesn’t like more money?

Those who are struggling, that’s who.

Inflation is good for asset owners like investors and savers. It’s bad for those who don’t own the investments that rise in price.

The thing is, some investments go up more than others.

You need to make sure you’re in the right camp.

Until next time,

Nick Hubble
Editor, Fortune & Freedom