$75 Billion In Mutual Fund Redemptions In September

A lot of people pushed the panic button in September. TrimTabs reported $75 billion fled U.S. mutual funds during the month, three times the monthly record set in 2001 for redemptions! About two-thirds of the outflow came from equity funds and the rest from bond funds.

When we had Claymore Investments CEO Som Seif as a guest at our last bloggers’ meeting, he said heavy fund outflows were an important indicator of a bottom in a bearish stock market, going by the historical evidence. It was at the top of his things to watch.

September might not be the exact bottom, but the figures would seem to at least indicate it’s getting close. “I agree,” says Mr. Som in response. “However so much will depend on Congress at this point,” he added.

Comments

[Larry House:]

I hope the fund withdrawals are a good sign. I am easing into some mutual funds at this point. Only time will tell if it is wise or foolish.

2008 Oct 01 10:46 PM

[The World's...:]

Buy when the blood in the street is flowing. We need the last washout, the capitulation. Give me the first page of the washington times. the cover of time saying we are doomed. When that happens i will say like Cramer: buy buy buyyyyyyyyy.

Holy VIX please stay over 40 for a couple of days.

2008 Oct 01 11:58 PM

[JudeJin:]

the credit crunch is once in a hundred year event. so using historical evidence in the past 50-60 years may not be right this time around.

stay cautious.

2008 Oct 02 12:16 AM

[MaxRoul:]

Past recession history says average 16 month in duration, 32% drop from peak. This one started last October. Might be longer and deeper. Just an opinion.

2008 Oct 02 12:41 PM