Skip to comments.Investors Are Staging One Of The Biggest Moves Into Equities Of All Time
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
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 ...
I think a majority of it.
I think a majority of it.
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.
That and re-investment of the lower-taxed dividend payouts from last month.
Whatever happened to buy low, sell high? Lambs to the slaughter.
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.
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.”
one born every minute
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.
Buy when everyone else is selling and hold until everyone else is buying. Thats not just a catchy slogan. Its the very essence of successful investing.
Buy ... and ... hold ...
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...
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.
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.
“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.
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.