Crash index:Only once in the last two decades have ordinary investors been as fearful of a market crash as they are today, according to Yale School of Management’s Crash Confidence Index.

Just one-quarter of institutional investors are confident that a crash will be avoided in the next six months, the lowest figure since the banking crisis peaked in early 2009. Just one in six individual investors is confident. That’s barely above 2009’s all-time low reading, and much lower than any other reading since 1989, when the survey began.

The survey will cheer contrarians, as market gains have followed panicked readings in the past. Many young people, however, no longer care what the stock market does. A separate survey found that while 29 per cent of people said they would never be comfortable investing in the stock market, that figure jumps to 52 per cent for people aged under 31.

Just as the Great Depression in the 1930s scarred ordinary investors, the halving of stock markets on two occasions in the last decade – the 2000-2002 dotcom implosion and the global financial crisis in 2008-2009 – means that the younger generation is likely to remain risk-averse in coming years.


Annual returns:Index investors had an unnerving 2011, the SP 500 eventually finishing flat after a hugely volatile year. Active fund managers did even worse – just 17 per cent beat the index, the worst performance since 1997.

Hedge funds also had a pathetic year. Hedge funds sell themselves as the smart money, nimble traders who profit from market declines as well as ascents. Despite this, preliminary numbers suggest that 60 per cent lost money.

Nor was 2011 a one-off. A recent paper in the J ournal of Financial Economicsfound that the average hedge fund returned an annualised 6.1 per cent after fees between 1980 and 2008, compared to 10.1 per cent for the SP 500. Smart money indeed.

Fed meets: Recently released transcripts from 2006 Federal Reserve meetings make for painful reading.

Fed chairman Ben Bernanke said it was “unlikely to see growth being derailed by the housing market” while Dallas Fed president Richard Fisher compared media focus on housing to “the birth of Brad Pitt’s baby”, prompting much laughter.

Tim Geithner, now treasury secretary, said the world economy looked “pretty robust” while “the more interesting questions” pertained to inflation forecasts rather than housing. Worst of all was Geithner’s obsequiousness towards retiring Fed chairman Alan Greenspan. “I’d like the record to show that I think you’re pretty terrific,” he gushed.