Steven Spielberg’s thriller undoubtedly changed film industry practices, but it was on the nation’s seashores that its impact was most clearly on display in the summer of 1975. I vividly recall going to the beach shortly after “Jaws” was released and noticing that hardly anyone was venturing into the surf. The handful of folks who were able to summon up the courage to enter the water were huddled into small groups a few feet offshore and periodically groups of teenage girls would shriek and run from the surf, inciting a mad scramble for the shore by the remaining bathers. Clearly the film had struck a primal fear deep within the human imagination.
Investors have resembled those frightened beachgoers in recent months. Many of them refuse to dip a toe into the stock market, choosing instead to remain beached in money market funds. The few brave souls who have taken the plunge remain seriously underweight stocks, preferring to wade into the supposedly safer waters of the bond market. When interest rates inevitably rise, the value of those bond holdings may drop faster than the tide at the Bay of Fundy, but for now bonds are attracting those most afraid of getting in over their heads.