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Investors Are Staging One Of The Biggest Moves Into Equities Of All Time
TBI ^ | 1-11-2013 | Matthew Boesler

Posted on 01/11/2013 8:40:38 AM PST by blam

Investors Are Staging One Of The Biggest Moves Into Equities Of All Time

Matthew Boesler
Jan. 11, 2013, 5:54 AM

It's been a dazzling week for mutual funds and ETFs.

$22.2 billion flowed into equity funds this week, marking the second-largest weekly inflow in history.

Inflows into emerging market equity funds this week were the largest – at $7.4 billion – of all time.

"A new year, memories of 2012 returns, zero rates, the “fiscal whiff’...whatever the reason investors capitulated into equities this week," writes BofA strategist Michael Hartnett.

Other big winners were long-only mutual funds, which recorded $8.9 billion in inflows this week – the largest since March 2000:

Hartnett also notes that retail investors have only purchased more stocks than they did this week twice before.

The chart below, via Markus Rosgen at Citi, breaks down where flows went by region. It shows that North American equities dominated developed market flows, whereas emerging market inflows were primarily into broad-based, "global emerging market" funds.

And even while money poured into stocks this week, bonds recorded $6.5 billion in inflows as well.

Hartnett says these flows strengthen the case for a correction:

Neither massive inflow nor bullish sentiment guarantees big correction in equities - still need a catalyst; but vulnerability to negative catalyst rising sharply

5% January dip in January would be healthy; without one risk of much larger correction later in the quarter grows.

Other signs investor sentiment now bullish: big large specs positions in NKY, SPY, IWM and Oil; 41/45 markets now trading above 200 & 50dma – most bullish reading since Nov'10.

All in all, a historic week.

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: bondmarket; economy; investing; markets; stockmarket; stocks

1 posted on 01/11/2013 8:40:47 AM PST by blam
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To: blam

2 posted on 01/11/2013 8:42:30 AM PST by blam
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To: blam
PAUL KRUGMAN: The Deficit Is Basically Solved
3 posted on 01/11/2013 8:50:02 AM PST by blam
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To: blam
How much of the move into equities is from people returning to stocks after selling at the end of 2012 to lock in their capital gains at last year's rate?
4 posted on 01/11/2013 8:51:59 AM PST by KarlInOhio (Choose one: the yellow and black flag of the Tea Party or the white flag of the Republican Party.)
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To: KarlInOhio

I think a majority of it.


5 posted on 01/11/2013 8:55:15 AM PST by Vasilli22
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To: KarlInOhio

I think a majority of it.


6 posted on 01/11/2013 8:55:32 AM PST by Vasilli22
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To: blam

Glad to hear it. After the cliff deal passed I changed my funds back over from conservative to moderately aggressive. Been making a decent chunk of change since.


7 posted on 01/11/2013 9:00:28 AM PST by TheRhinelander
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To: KarlInOhio
to lock in their capital gains at last year's rate?

Winner.

8 posted on 01/11/2013 9:04:00 AM PST by concerned about politics ("Get thee behind me, Liberal")
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To: KarlInOhio

That and re-investment of the lower-taxed dividend payouts from last month.


9 posted on 01/11/2013 9:07:45 AM PST by The Free Engineer
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To: blam

Whatever happened to buy low, sell high? Lambs to the slaughter.


10 posted on 01/11/2013 9:09:26 AM PST by Dr. Thorne ("How long, O Lord, holy and true?" - Rev. 6:10)
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To: blam

A contrarian signal if there ever was one. The crowd is always wrong.

Bond guru Jeffrey Gundlach http://www.businessweek.com/articles/2012-05-10/jeffrey-gundlach-bond-savant told investors during a Tuesday conference call to short the S&P 500 (like SPY or contra funds) and go long the Shanghai (like FXI).

Note: Gundlach was the individual that offered a $2 million reward for the return of his stolen art and a rare exotic auto from his Santa Monica home - all now recovered and the perps arrested. Last year, Gundlach told investors to short Apple, “I hate things that go vertical.” He was right.


11 posted on 01/11/2013 9:16:53 AM PST by CreviceTool (Vice President "Crazy Joe" Biden says that "GUNS" is a three-letter word)
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To: Dr. Thorne

J. Paul Getty
“Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing.”


12 posted on 01/11/2013 9:19:00 AM PST by abb
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To: blam

one born every minute


13 posted on 01/11/2013 10:14:22 AM PST by paul51 (11 September 2001 - Never forget)
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To: CreviceTool
“A contrarian signal if there ever was one. The crowd is always wrong.”

If that were true, it would be easy to make money by shorting when mutual fund inflows are high and going long when they are low. But there is no evidence that this strategy makes excess returns over a simple buy-and-hold strategy.

14 posted on 01/11/2013 10:16:50 AM PST by riverdawg
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To: abb

“Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing.”

Buy ... and ... hold ...


15 posted on 01/11/2013 10:18:35 AM PST by riverdawg
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To: KarlInOhio

I know that’s why I sold some late last year. I would imagine the gov’t tax revenues will be up for the year from these sales. I’m thinking March is going to be a bad news month, which could be a good time to re-invest. jmo...


16 posted on 01/11/2013 10:31:33 AM PST by lwd
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To: blam

I am 90% super aggressive. That may change at some point but the USA drives the markets. I haven’t lost a damn dime. Dropped 20% in 2010 and roared back 40% in 2011.

Oh! did I mention I invested in gold at 350.00. I miss those guys.


17 posted on 01/11/2013 10:35:33 AM PST by eyedigress ((zOld storm chaser from the west)/?)
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To: KarlInOhio

There was a $220b jump in deposit accounts in December - the largest ever in history. Seeing a $22b move into equities is not all that surprising, considering.

How they are attributing the total to retail investors is comical. The Fed is pumping this bubble, and unfortunately, they are pumping up the bond and equity bubbles simultaneously. They are in a vicious circle, at this point, and built a negative feedback loop where the Fed policy is eating up any aggregate demand. We will be sub 1% (truly negative) in GDP growth for last quarter. People are out of the markets and stuffing cash away - that is the real story, regardless of how they want to sell it.


18 posted on 01/11/2013 11:14:04 AM PST by RobertClark (It's 106 miles to Chicago, we got a full tank of gas, half a pack of cigarettes, it's dark and we'r)
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To: riverdawg

“But there is no evidence that this strategy makes excess returns over a simple buy-and-hold strategy.” ...Thank you riverdawg for buying and holding, because market timers couldn’t borrow your shares for short positions otherwise.

Very happy that I bailed in January of 2000 only to get fully invested in March of 2003. I unloaded my speculative real estate holdings in 2006 (Ameriquest was beginning to crack)and bought 3 properties in various markets during 2009-2010 for $.30 on the dollar at the peak.

Sold out my long equity positions in December of 2007 when all the talking heads on CNBC said the globe was awash in liquidity (sure sign of the apocalypse) and re-entered with gusto again in March of 2009 when the the S&P broke below 800.

I’ve incrementally sold half of my long positions since October of 2011. Will likely follow Gundlach’s advice and short the S&P soon along with a long position in FXI.


19 posted on 01/11/2013 7:24:29 PM PST by CreviceTool (Vice President "Crazy Joe" Biden says that "GUNS" is a three-letter word)
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To: CreviceTool

Congratulations. You might be very skilled or you might be very lucky. Neither you nor anybody else knows for certain. For most investors, buy and hold beats market timing over the long haul.


20 posted on 01/13/2013 12:21:20 PM PST by riverdawg
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To: blam
$8.9 billion in inflows this week – the largest since March 2000:

What happened to stocks, especially techs, after March, 2000?

21 posted on 01/13/2013 12:25:56 PM PST by steve86 (Acerbic by Nature, not NurtureĀ™)
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