Money Pours Back in Stocks: 'Have to Take This as Bullish'
Investors suddenly seem to like stocks again.
After watching the market post double-digit returns last year—and with the Fiscal Cliff resolved for now—Americans are pouring billions of dollars into stocks.
Just over $22 billion flowed into long-term equity mutual funds and exchange-traded funds in the week ended Jan. 9, according to Bank of America Merrill Lynch. That was the second-highest amount on record after the $22.8 billion that went into all equity funds in September 2007.
"I have to take this as bullish," said Dennis Gartman, veteran author of the daily Gartman Letter. "Perhaps one gets a bit antsy when the public's in, but inflows are always better than net outflows and the public is still sitting on a mountain of cash or debt securities."
Some, however, believe it's too early to tell if this is really a trend.
"I'm a little skeptical," Art Cashin of UBS told CNBC on Friday. "I want to see if they continue." (Watch video above)
The biggest catalyst for new money into stocks may have been Congress finally coming up with a compromise on the fiscal cliff. The battle in Washington had been an albatross around investor sentiment all December because of uncertainty over tax rates for dividends and capital gains.
The fiscal cliff deal ended up keeping the dividend and capital gains tax rate at 15 percent for families with incomes below $450,000.
"I think this has a large seller's remorse component in it, as a lot of people booked long-time profits off of the fiscal cliff potential tax ramifications in November and December and now they are chasing," said Jeff Kilburg of KKM Financial.
Even more striking was the amount of money going into equity mutual funds, the purview of the less-active, more traditional retail investors. Of that $22 billion inflow, $8.9 billion was into these funds, the biggest weekly influx in 12 years. Bofa/Merrill Lynch, which uses a composite from Lipper, EPFR and other services, has the data going back to 1992.
"Crisis fatigue has settled in and now investors, especially retail, see that they're missing the potential upside and dividend potential of stocks while hiding in bonds," said Mitch Goldberg of ClientFirst Strategy. "The Armageddon that they expected simply never materialized. They simply became too negative after being pounded into the dirt a few times in the last 12 years."
The S&P 500 jumped 13 percent in 2012, its biggest gain in three years and likely quite the eye-catcher on the front page of newspapers and inside investment account statements.
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Traderdisclosure: On January 11, 2013, the following stocks and commodities mentionedor intended to be mentioned on CNBC's "Fast Money" were owned by the"Fast Money" traders; Jon Najarian is long RIMM CALLS; Jon Najarianis long call spreads in DNB; Jon Najarian is long call spreads in LVS; JonNajarian is short HLF 40 straddles; Stephen Weiss is long M; Stephen Weiss islong BAC; Stephen Weiss is long JPM; Stephen Weiss is long C; Stephen Weiss islong FB; Stephen Weiss is long TBF; Joe Terranova is long VRTS; Joe Terranovais long XOM; Joe Terranova is long AAPL; Joe Terranova is long SWN; JoeTerranova is long GS; Joe Terranova is long MS; Joe Terranova is long DELL; JoeTerranova is long GLW
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