This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

German Economist: Fear To Dog Investors For Years


NEW YORK (AP) â¿¿ Investors around the world have retreated from risk before. But this time is different.

So says Arne Holzhausen, a senior economist at Allianz, an insurer based in Munich. He says what's keeping people from returning to taking chances with their money is not just a fear of loss, but a mistrust of the financial system. His prediction: Investors will remain cautious for several years to come.

Depending on your view, Holzhausen is qualified either to understand this new cautious world, or to exaggerate its impact. A German, he shares with his countrymen a reluctance to gamble with money even in the best of times. He also has seen the damage when the appetite for risk swings from one extreme to the other: He lived and studied in Japan in 1989-1990 when overconfident investors pushed stock prices to a record, then in 1994-1995 after many had sold at a loss and the economy had entered a two-decade slump.

In an interview, Holzhausen, 46, explained the psychological "scarring" that has kept people from buying stocks in the past five years, how living in Japan during its boom and bust shaped his views, why Germany is not the model economy widely assumed, and why he, like many Germans, has stayed away from stocks.

Excerpts below have been edited for clarity and length:

AP: Some economists talk about "scarring" from the financial crisis. What do they mean by that term?

Holzhausen: If you have a bad experience in your young, formative years, you don't easily forget. In the beginning of the (last) decade, there was the tech bubble, then came the financial crisis. The generations in their 30s and 40s will keep cautious.

It's not so much about value. People are deeply skeptical about the fairness of financial markets â¿¿ heads the banks win, tails you lose.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs