×

Flight Out Of Mutual Funds

graphic_fast_money.jpg

Chances are when you open your mutual fund statement you don’t like what you see. Most funds are down and by double digits. But are you cashing out?

Many Americans are. According to TrimTabs Investment Research investors have been pulling money out of mutual funds every week since July 24th. And it seems that trend shows no signs of stopping.

Take a look at the numbers below. During the month of October $70 billion was withdrawn from mutual funds. In fact, that’s a new record.

Record Outflow From Equity Funds
New Record: October '08: $70 Billion
Old Record: July '02: $52 Billion
Source: Charles Biderman, TrimTabs Investment Research

Record Outflow From Global Equity Funds
New Record:
October '08: $27 Bln.
Old Record: September '08: $22.5 Bln.
Source: Charles Biderman, TrimTabs Investment Research

The trend seems so startling to us that we invited Charles Biderman onto the show to provide us with further insights.

He tells us, “In July 2002 the world looked pretty crummy. In fact it looked a lot like it did this past October. But instead of a tech bubble we had a hedge fund bubble. Higher energy prices created huge amounts of money going into hedge funds. A trillion dollars went into hedge funds over 4 years ending in 2007."

“And that created a bull market for every asset class around the globe. But that bubble burst and the money came out.”

You knew that already but what you might not have know is that "a lot of that money was in real estate. And the money coming out of real estate has stopped."

In other words, maybe we’ve reached a plateau. And that could be very good news because as you well know the housing issue is at the very heart of the crisis threatening Wall Street.

Perhaps there's light at the end of the tunnel. We’ll be watching.

You can see our entire interview with Charles Biderman at the end of the Word on the Street video.


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Oct. 31, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (F), (MER), (EEV); Seygem Asset Management Owns (PBR), (VIP), (CX), (EEM); Karabell Owns (AAPL), (CAT), (CSCO), (GOOG), (JPM), (MS), (VIP), (UTF), (AGU); Terranova Owns (AAPL), (EXM), (FCX), (VLO), (X), (POT), (NOV), (MA), (FTO)

Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)

Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (CNW), (OFC), (DLM), (DRH), (DLR), (EPR), (EXR), (FL), (SLB), (LNET), (MAC), (DBC), (DBV), (SKT), (UA), (BLV), (VV), (CLB), (GWX), (IGE), (FSMXX); Virtus Investment Partners Owns Seagate Tax Refund Rights; Virtus Investment Partners Owns Seagate Technology Tax Refund Rights; Virtus Investment Partners Owns More Than 1% Of Shares Of Incitec Pivot Ltd.; Virtus Investment Partners Owns More Than 1% Of Shares Of Essex Property Trust Inc.

GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC

CNBC.com with wires