First, I think investors are becoming wearisome of the sideways movement of the stock market and the prospect for a double dip recession. In addition, there is the issue of dark pools of liquidity and high frequency trading distorting equity markets. This is leading to a push to other types of non traditional investment. If things continue, there could be a flight from equity lasting years. This would depress p/e ratios.
Given the performance of the stock market since 2000, I can understand why investors are concerned. When adjusted for inflation, the stock market was a net loss during the past decade just as many baby boomers are putting children through college, caring for elderly parents, and witnessing the decline of the value of their homes. Overall, 401k plans have lost a great deal of value.
A second issue involves the underlying security various institutions and businesses in America provide. For example, the health care system is a necessity for all people and yet it undergoing a great deal of change because of recent government programs. There is a great deal of uncertainty as to how effective the changes will be in practice. Another example is the food system. The egg recall once again shows that vulnerabilities exist in the production and supply chain for agriculture. These are things that most people take for granted until a calamity occurs.
The ramifications of the 2008 financial crisis will reach many years into the future. I do not think people understand this almost certain outcome.
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