Seeking Alpha

Stock fund outflows spike to five-year highs

  • Judging by the latest fund-flow data, investors are selling now and asking questions later, yanking $12.3B out of U.S. stock funds last week, the biggest outflow in more than five years.
  • A combined $20B flew out of stocks and bonds, while money market funds saw an influx of new cash.
  • The question now is whether the big outflows across asset classes marks the beginning of a new trend, especially as concerns grow about the Fed’s next move.
  • ETFs: SPY, VTI, IYY, EXT, IVE, SSO, IVV, SH, SDS, SPXU.
Comments (26)
  • rrobster
    , contributor
    Comments (118) | Send Message
     
    OK, money markets are not even keeping up with inflation-does not seem like a wise choice to me. Of the total outflow amount, I'm wondering what percentage of this was attributed to institutional vs. retail investors?
    23 Aug 2013, 07:22 PM Reply Like
  • Jake2992
    , contributor
    Comments (825) | Send Message
     
    Would you rather lose 0.5% over the course of year, or lose 10% of your portfolio the next correction?
    24 Aug 2013, 03:49 PM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    Excuse me for stating the obvious, but for all we know, given the current liquidity in mks thinner than Karen Carpenter, it's just the futs players slinging Eminis and forcing Instl players to squeeze. There is no real retail participation. Only by fools who listen Cramer and his ilk. We've only just begun...
    24 Aug 2013, 05:21 PM Reply Like
  • GizmoA51
    , contributor
    Comments (116) | Send Message
     
    I'll be 67 in two months and have been retired for over five years. I still invest a little each month into dividend paying stock and bond ETF index funds and I just want to point out that my monthly income increases each month whether the markets go up or down. So for me, I don't really care what other people do as long as my funds stay above zero and the dividends are paid.
    24 Aug 2013, 08:48 AM Reply Like
  • dancing diva
    , contributor
    Comments (2403) | Send Message
     
    That looked like a bullish headline to me until I l viewed the WSJ article and actually looked at the chart. Just a few weeks earlier there had been the largest inflow in years and there has been consistent fund flows into stocks beginning late last year.
    24 Aug 2013, 11:20 AM Reply Like
  • Tack
    , contributor
    Comments (12704) | Send Message
     
    Notice that the two previous occasions when outflows were of the same magnitude were Summer 2010 and Fall 2011, both of which occasions marked the bottoms of corrections, followed by sharp reversals.
    24 Aug 2013, 01:19 PM Reply Like
  • Jake2992
    , contributor
    Comments (825) | Send Message
     
    I wouldn't call this a correction, S&P500 is down 3% from highs.
    24 Aug 2013, 03:51 PM Reply Like
  • Tack
    , contributor
    Comments (12704) | Send Message
     
    jake:

     

    I has posited in previous comments that the market is having a very difficult time generating any significant corrections because there's simply too much liquidity waiting to buy any dips, so as soon as the market tries to head downward, it attracts buyers with itchy fingers. I don't see this situation being significantly altered in the short term unless some major global event would alter the status-quo mentality.
    24 Aug 2013, 04:22 PM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    Exogenous events are inherently unpredictable. That said, with a reasonable degree of certainty, in the shadows of the G20 Leaders' Summit, to be held in St. Petersburg on September 5-6, we discount the near-term possibility of a coordinated, US-led attack on Syria. Obama, in response to Russia's harboring of Snowden has been openly critical of the state and has announced that he will not meet with Putin. Russia has backed Syria with arms, possibly even the missiles that contained the chemical warheads Syrian citizens died from last week. Assad escalates, Putin enables, Rouhani inserts, and Netanyahu is on high alert. Is that major and global enough for you?
    24 Aug 2013, 05:58 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4503) | Send Message
     
    Tack,
    I believe you may have nailed it .... I have been waiting ,along with countless others for that 8-10% dip. It sure seem's like this maybe playing out like 1995 . Small dips here & there but no meaningful pullbacks.. I'm holding out for turmoil on debt ceiling "noise" and the eventual possibility of the fed easing on purchases. Now wonder if the market has priced in the first step of fed tapering already.
    24 Aug 2013, 06:44 PM Reply Like
  • Tack
    , contributor
    Comments (12704) | Send Message
     
    F&G:

     

    Debt ceiling is a one-act play that's already been shown. It will be greeted with a yawn. We've already had a rate over-reaction to tapering, so i doubt that's going to stir the pot, either.

     

    Look for good-yielding value plays, and reap the dividends, while we meander sideways.
    24 Aug 2013, 06:57 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2261) | Send Message
     
    Tack: Jeremy Siegal researched all the big market moves between 1801 and 2001. Roughly 75% of the time there was no rationale for big moves. This is why even the smartest financial pundits have a poor track record at market calls. It's also probably why experienced money managers typically avoid making market calls.
    24 Aug 2013, 07:33 PM Reply Like
  • Tack
    , contributor
    Comments (12704) | Send Message
     
    WSD:

     

    Big moves can occur because of sudden, usually unpredictable, dislocations. History is replete with examples. They also get started, downward ones especially, because of liquidity exhaustion.

     

    Market timing is a fool's game.
    24 Aug 2013, 08:00 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4503) | Send Message
     
    Tack,
    Here's some stats on the "big market timers"

     

    Goldman Sachs did a recent survey of over 708 hedge funds (with $1.5 trillion in assets) and found that less than 5% were beating the SPX as of mid-August. In fact, the average hedge fund was up just 4%, versus the SPX's gain of 20% at the time. Incredibly, one in four hedge funds is actually lower this year.

     

    These guys have a tendency to play "catch up" to get their bonuses and keep their jobs. If so, more fuel to keep pullbacks from getting very deep.
    25 Aug 2013, 11:01 AM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    Agree, Tack. However, F&GT - when fundamentals become divorced from reality, esp when liquidity becomes drier than the Sahara in late August, technicians step in to manage vol. Gamma hedging rules the day. There is a difference between mkt timing and daily pinning...
    25 Aug 2013, 11:46 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4503) | Send Message
     
    Bscvet,
    good luck with your "fundamentals divorced from reality thesis"
    25 Aug 2013, 12:05 PM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    You must be delusional. Now back to reality. How about this for a thesis: http://bloom.bg/1dl6a73
    26 Aug 2013, 10:47 PM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    Tack, politics aside - keen observations, but sorely reactionary. Value investing in stocks hasn't been an investable theme since Draghi's "Bumblebee" speech. Since then we've moved on to multiple expansion...

     

    Value has resurfaced in European markets, but, again - that ship's already sailed for most.

     

    Now let's begin to look at China and Latam mkts. The Mexican peso's a harbinger of goodwill if you care to play in that sandbox...

     

    Where do you find value in equities now?
    26 Aug 2013, 11:35 PM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    F&GT - to be blunt: the market began to price tapering into yield steepeners when Ben went ZIRP. Did somebody say "noise"? Duh.
    26 Aug 2013, 11:54 PM Reply Like
  • Tack
    , contributor
    Comments (12704) | Send Message
     
    bsc:

     

    Value investing never goes out of style.

     

    Ship has sailed in Europe? Hardly. Look at banks, telecoms, energy companies, for starters.

     

    Personally, I avoid China because I cannot get a handle on reliable data for the valuation analysis. No doubt, value is there, I just don't know how to assess it with confidence.

     

    Mexico? Like and invest in MXF.

     

    Huge future opportunities brewing in Brazil, as its indices sag lower each day. Keeping an eye on PBR, SID, VALE, EBR, CIG, among others.

     

    Always like Chile and hold CH.
    27 Aug 2013, 05:38 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4503) | Send Message
     
    bcs,

     

    yes let me sell all of my equity positions, because of SYRIA ! -LMAO

     

    Very intelligent commentary by another frustrated bear , masquerading at times as a gold bug.
    27 Aug 2013, 08:53 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4503) | Send Message
     
    Bcs,
    please allow me to be blunt also,

     

    when you decide to get on the 'right' side of the markets, leave a comment
    You're trumpeting these remarks - claiming some type of 'victory" as the market is down approx 4% from an all time high ..

     

    That is surely delusional thinking

     

    BTW gold is down now only 16% this year , and a mere 25% from its high , Hmm , still in a bear market ..
    27 Aug 2013, 08:58 AM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    Agree. Value is timeless and proven winning *investment* strategy. If your name were Buffet, you'd also employ massive leverage, insider info and the ability to move markets with the stroke of a pen. Strange, isn't it that he's been quiet as of late..

     

    But this is because investors aren't traders, and the current climate favors the latter.
    27 Aug 2013, 10:16 PM Reply Like
  • bscvet
    , contributor
    Comments (25) | Send Message
     
    The handle is BSC.
    27 Aug 2013, 10:17 PM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (1888) | Send Message
     
    Oh, I can explain that, my broker has been puttin' me in growth funds.
    Capt. Brian
    The Lost Navigator
    24 Aug 2013, 01:33 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2261) | Send Message
     
    If cash and short-term treasuries are still popular after half a decade of yields well below the rate of inflation, imagine the investment demand for such assets when they provide a real investment return. There must be huge pent up demand building for the day when they offer a real return.

     

    Perhaps this is what is spooking stock investors.
    24 Aug 2013, 08:10 PM Reply Like
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