Invest or be left behind. This year and last were banner years for Wall Street, both for brokerage firms that deal with individual and institutional innovators, and for investment bankers who handle initial public offerings. The securities industry has benefited mightily from the market's volatility and high trading volume, as well as consumers' love affair with mutual funds. We have become a nation of savers and investors.
The pace of mutual fund sales remained impressive in 1996, even though total net sales slowed during the first two quarters. If the pace set in 1996 continues, it could eclipse the prior record, set in 1993, of $280 billion in net sales.
Impressive as that seems, weakness in the stock and bond markets for an extended period could cause a reversal of fortunes for investors. Instead, consider investing in financial services companies with broad product lines and recurring fee income generated from the sales of mutual funds and other managed accounts.