How share ownership has gone out of fashion

From The Times
January 2, 2009
How share ownership has gone out of fashion
Patrick Hosking, Business and Finance Editor

For decades the proportion by value of shares directly owned by private individuals has been shrinking as they come to rely more on occupational pension schemes or pooled investment vehicles such as unit trusts.
Michael Kempe, operations director for Capita, said: “Never in modern times has share owning been less fashionable. The combination of falling share prices and the long-term trend by private investors to reduce their holdings has seen 2008 end with a whimper.”
He said that the booming residential property market had till recently diverted money that might otherwise have gone into the share market: “The lure of getting rich quick in the property market has mopped up a lot of money. Since 2000, at least £150 billion has been piled into the buy-to-let market alone.”
However, Mr Kempe predicted the trend could be reversed in 2009, citing evidence that small shareholders were starting to dip their toes into the stock market again in October and November after being net sellers for most of 2008. In the year just gone, they traded £7.2 billion in shares, compared with more than £14 billion in 2007.
“Normally private investors shun volatile markets and they have been sitting on the sidelines for much of the past year. But it seems the lows of October and November proved irresistible to many.” They bought a net £645 million of shares in those two months, he said.
Mr Kempe expects market conditions to improve in 2009. “But it seems too early to call a bottom just yet,” he said. “The recent upswings have all the characteristics of bear market rallies and have soon petered out.”

http://www.timesonline.co.uk/tol/money/investment/article5430122.ece