Investors often flee the stock market and then jump back in, but too late for their own good. The evidence of the past year fits the pattern: New money coming to stock mutual funds has been negligible even as returns have been among the best on record. An influx into stocks in the coming months would suggest investors once again waited too long. They have reasons to be cautious, of course, While the market is up almost 70% in the past 12 months, many mutual funds are still below their pre-crisis peak. "There's still some sensitivity to how much was lost [in the bear market] – investors are still opening their 401(k) statements and seeing losses," said Todd Rosenbluth, mutual-fund analyst at Standard & Poor's. The question is whether the losses were so big that they scared investors away from stocks not just for the next few months, but also for years. "I don't know if we're seeing the demise of actively managed mutual funds – if we are seeing a big change – but a lot of people seem to have decided to stay away from stock funds," said Tom Roseen, senior analyst at research firm Lipper Inc. From March 1, 2009, through Jan. 31, stock mutual funds saw net inflows of $21.22 billion – trivial for a sector that has about $4 trillion in assets. In the same period, bond funds saw net inflows of $328 billion. – Wall Street Journal

Dominant Social Theme: They're missing the boat?

Free-Market Analysis: After the Great Depression, the American stock market was decimated. In the latter 1940s, the New York Stock Exchange, in desperation, came up with the idea of road shows to explain to American investors the benefits of investing in stocks. The publicity campaign worked over a period of time. Eventually, the US stock market took off and really hit its stride in the 1960s, culminating in a perception that a list of nifty fifty corporations offered a "can't miss" opportunity to guarantee (hopefully) the eternal solvency of one's family.

McCain Abandons Dietary Supplement Regulation Bill ... Arizona Sen. John McCain (left) has abandoned his own bill that would have increased federal regulations on dietary supplements. Sen. Orin Hatch, R-Utah, who has long been a champion of supplements, urged his fellow senator to withdraw his support from bill S. 3002 that would have required all manufacturers of dietary supplements to register with the Food and Drug Administration and provide a list of their products and ingredients. In addition, the bill would have made it much easier for the FDA to recall dietary supplements. Experts believed it would also drastically limit their availability to consumers. – Newsmax

Dominant Social Theme: A concerned senator rethinks.

Free-Market Analysis: Is there any elite dominant social theme that John McCain doesn't want to support? During the waning regime of George W. Bush, he came out in favor of flooding the United States with workers from Mexico – and its corollary which was building a transnational highway to connect Mexico and Canada, thus cutting the US in half. He always supports the US military-industrial promotion of endless war for endless peace around the world. He is for endlessly higher taxes to support an endlessly higher deficit. He backs the current central banking regime, is yet a proponent of global warming, and most recently he came out in favor of further regulating America's dietary supplement industry.

"Quantitative easing (QE)" is an ugly name for an important task: the need to make monetary policy effective when interest rates are close to zero. The world's leading central banks, including the Bank of England, have taken such actions. But is UK policy working? Yes, but not quite enough. The argument about quantitative easing is polarized: some critics wail about inflationary "money printing"; others complain that too little attention is paid to the flow of credit. Of the two camps, the latter is the more persuasive. At its simplest, as Charles Bean, the Bank's deputy governor, has explained, the Bank uses newly created money to purchase assets. Hitherto, the UK's QE has amounted to £200bn ($274bn), mainly used to purchase government bonds. The new money, in turn, ends up as bank reserves at the Bank. ... As Mr. Wilkes also argues, in today's exceptional circumstances, the Bank could usefully buttress its inflation target with a medium-term objective for nominal demand. Then, if QE has to be restarted, the Bank could use such a framework to explain why. Desperate times need desperate measures. The times are not over. Nor, therefore, are the measures. – Financial Times

Dominant Social Theme: It's a really good idea and it works.

Free-Market Analysis: This editorial in the Financial Times from March 7, 2010, excerpted above, is a tiny little yelp from the power elite, in our opinion. Maybe, just maybe, the ruckus over so much central bank money printing is beginning to reach the ears of those who actually create the money – even in the rarified heights of British high finance. Here's the telling phrase: "The argument about quantitative easing is polarized: some critics wail about inflationary 'money printing'; others complain that too little attention is paid to the flow of credit."

Editor's note: Mike Scotti served as a U.S. Marine in Afghanistan in 2001 and Iraq in 2003, and is a founding board member of Reserve Aid, a military-themed, nonprofit charity. He is the founder of the Military Veterans Club at the NYU Stern School of Business and is the subject of the documentary film "Severe Clear," which opens in New York on Friday. ... "A few days after I had returned from a six-month deployment to Iraq, my second sojourn in the Middle East since 2001, I remember feeling like I was an alien creature from some other planet. It was 2003, and I was attending a friend's wedding. As I sat at the table listening to the conversation, I suddenly realized that someone who had never been in combat could never even remotely understand what I had just been through. I looked around. The chamber music quartet, the beautiful bridesmaids, the steak dinner ... none of it was real. My buddies were, at that moment, probably on patrol and quite possibly engaged with the enemy. That was real. And as for the other guests at the table who were staring at me in my dress blues, we were no longer even the same species." – CNN

Dominant Social Theme: The loneliness and alienation is real.

Free-Market Analysis: We found the article, excerpted above, to be most sad, though our collective hats are off to Mike Scotti for the good work he is trying to do in helping vets readapt to civilian life. We cannot tell what Scotti thinks of the war efforts in Afghanistan or Iraq, but certainly his pain is real and shared by thousands who find it hard to live in a peaceful society after the stresses of war. While the article itself was interesting, if sad, the commentary beneath the article was just as enlightening in our opinion. Two feedbacks stood out, and we reproduce them below:

Forget gold and focus on its producers ... In December, I was told that China had appointed an agent in London to buy up every ounce of gold they could find. It was too incredible to believe. When speculation gets this hard to swallow it's a certain sign that a market is hitting a top. Today's news suggests it was another fantasy from the legion of gold bugs. The man in charge of China's $2.4 trillion of foreign-exchange reserves said that the yellow metal is unlikely to be a 'primary investment' as it diversifies. So the argument beloved of gold bugs that China will move to severely reduce the dollar as its reserve currency in favour of gold has been shot down. But that doesn't mean you should not have exposure to the yellow metal – quite the contrary. Gold is a key part of any portfolio. For now, it's not a good idea to buy into the metal directly, but instead to invest in gold companies that look set for strong production growth in the next few years. – UK Telegraph

Dominant Social Theme: Gold is bad, but gold producers are good, especially Barrick.

Free-Market Analysis: The logic of this article is a bit puzzling to us. The author, Garry White, describes himself this way: "As editor of the Questor column, I'm the Telegraph's share tipster, as well as its mining correspondent. I believe stock market investing is easy - all you have to do is look at trends in the world around you [and then] employ common sense. I'm particularly interested in commodities and the effect population growth will have on demand for life's basics such as food and water over time."