Trader Talk

Indices Hit New Highs So Where Are The Investors?


Are investors in for a rude awakening?

With all the major indices hitting new highs, you'd think U.S. investors would be flocking to stocks.

Think again.

Look at these stats from the last five weeks of mutual fund flows:

  • U.S. stock funds: $18.1 b OUTFLOWS
  • Global stock funds: $2.9 b INFLOWS
  • Bond/hybrid funds: $70.7 b INFLOWS

Source: ICI

That's right: investors are continuing to take money OUT of U.S. stock funds, putting tiny amounts INTO overseas stock funds, and are continuing to THROW MONEY AT bond and hybrid funds (which can invest in stocks and bonds).

Bottom line: throughout all of 2009, investors have avoided U.S. stocks and poured money into bond funds, and that trend shows no sign of abating.

The theory? "Seems like investors think bond funds are safe, and don't go down," one trader said.


Elsewhere: Stocks little changed on the Fed's Beige Book report, though the commentary could best be described as "subdued."

  • US Slowly Clawing Out of Recession: Fed's Beige Book 

Example: "reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered."

Commercial real estate came in for an especially downbeat observation: "with conditions described as either weak or deteriorating across all districts."



Questions?  Comments?