Is the break down of the middle class investor. I'm talking about many friends of mine who barely realize how much they'e lost in the last to months. They're on SIP's (systematic investment plans) in mutual fund RRSP's, and don't know much about the market. All they know, or think they know, is that it's a good thing to set a bit aside at a time for the future and retirement. They check their portfolio a few times a year when their statements come in.

This time their statements will come in down 30-40%. Try to justify throwing money into something that was supposed to be relatively safe and lost 40%. It's not just the fund withdrawals that are a problem here. If I was not losing my own money, I would be pissed off and would start spending the money on paying off debt or on everyday living. I think the next couple years could be very bleak for new investments in mutual funds.

If you're American, just substitute "401k" for RRSP.

There's enough money sitting on the sidelines to cause rallies. But when all of the redemptions are done, I'm not convinced life will be any easier for mutual funds.

MR