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Bulls gone wild: Money flows hit a new record

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Traders may have been skittish ahead of this week's Federal Reserve meeting, but they still bet heavily on risk.

So much, in fact, that the period marked the biggest week ever for money flows to stock-based funds.

Equity funds took in a staggering $26 billion globally, and most of the buying took place before Wednesday's key Fed Open Markets Committee decision, according to data from Bank of America Merrill Lynch and Thomson Reuters.

Most of the global take and virtually all of the $16.9 billion to U.S. equities came via exchange-traded funds. The $1.6 trillion ETF industry is primarily the playground of traders looking to make a quick move on anticipated market trends.

(Read more: Stocks are about to plunge, Wells Fargo pro warns)

Michael Hartnett, chief investment strategist at BofAML, termed the heavy flows a "big pre-FOMC short-covering" play, meaning that those betting against the market were looking to protect themselves against a big swing in the other direction.

It turns out the market staged an impressive rally after the Fed revealed that it was going to continue its $85 billion a month bond-buying program without the "taper" in purchases that many in the market had anticipated.

More broadly, the move meshes with some concern that investor appetite for stocks is getting a bit overblown now that the market has gained about 150 percent since the darkest days of the financial crisis.

Warren Buffett told CNBC on Thursday that he is having a difficult time finding bargains in the market.

(Read more: Buffett: Stocks now 'fairly priced')

Activist investor Carl Icahn also said he thinks the market has reached full valuation and worried that "the market is giving you a false picture.

(Read more: Icahn: Market is fully valued, but Apple is a buy)

Traders, though, may have been simply following the mantra of the last five years, during which the Federal Reserve has expanded its balance sheet to $3.6 trillion in hopes of goosing risk assets.

Many simply feel there is nowhere else to go, and the feeling ahead of the tapering call was that if the Fed does pull back, it would make fixed-income even less attractive.

"Where is your money better suited if the Fed is going to start to taper?" said Art Hogan, managing director at Lazard Capital Markets. "You're going to start to have rising rates and then dropping bond valuations. Even though that dynamic may have been put off in the short term, I think that's the eventual game."

Bond funds did see inflows for the week of $1.4 billion in the U.S. and a bit less globally, counter to the year-long trend that has seen fixed income lose about $15 billion.

The trend has turned for emerging markets as well.

After losing $51 billion since March, the funds took in $1.5 billion last week in a trend that Hartnett said shows "EM equities (are) unloved and underowned."

_ By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.

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