20th Consecutive Week Of Outflows

Tyler Durden's picture

Here are the facts: Beginning on May 5, there have been 20 consecutive outflows from domestic mutual equity funds. The average weekly outflow has been ($3.5) billion. Total outflows in this period are $70 billion. Total outflows YTD are $68 billion. The S&P on May 5, the day the series of outflows began, was 116.8. Today it closed at 113.5, a 2.8% decline despite almost $100 billion of runrated outflows. Furthermore, as we previously disclosed, YTD ETF flows through August into pure domestic equity-related strategies have been a negative $16.8 billion. In other words, the stock market is now virtually unchanged in 2010, even as almost $80 billion in equity-capital has been withdrawn.

Here is our question: how is this possible?

Weekly flows into domestic equity mutual funds:

Cumulative equity flows into domestic equity mutual funds:

Source: ICI

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Mr Lennon Hendrix's picture

Farcism; more than a way of life.

kengland's picture

You're right. This data is totally irrelevant at this point for that reason. All it proves is that they have COMPLETE control over events.

SheepDog-One's picture

For an ever shortening length of time. How long do you really think they can keep printing out of thin air and pumping fake stocks to 'make things look ok'? For what? Whats their purpose to do it? What is their END GAME do you think? I dont think they keep this crap up longer than mid Oct, its reversal time.

DaveyJones's picture

is the 20th anniversay silver or gold?

StychoKiller's picture

25th = Silver, 50th = Gold!


kathy.chamberlin@gmail.com's picture

you guyz, are so full of shit.

CD, isn't it your 25th - silver?

optimator's picture
It's called a 'Grudge Market'.   You know, when somebody has it in for you.
VK's picture

Maybe unicornz do shit skittlez!

Dr. Copper's picture

Because the public is always wrong?

Pladizow's picture

Are you refering to the out of work public, with too much debt and no discretionary income?

kathy.chamberlin@gmail.com's picture

you know i just can't confirm your picture. really, what is the black thing?

midtowng's picture

Even a stopped clock is right twice a day. You can't have a rule without an exception to that rule.

Vampyroteuthis infernalis's picture

Unless it has a digital display, then it is always wrong when stopped.

Johnny Moscow's picture

correct me if I'm wrong but I believe that even a digital clock flashes "12:00" constantly so wouldn't that mean that it still is correct 2x daily?

tmosley's picture

They are wrong only to the extent that they might think they aren't vulnerable to the manipulations of the market makers after they have withdrawn their wad.

The public might tend to be wrong about what to buy and sell, but when they take htier money and go home, there's trouble a'brewin'.

rocker's picture

For myself, I have already closed two of four accounts completely. Stores nicely in a two safe deposit boxes.

Have replace much of the cash with physical Silver, Platinum, Palladium, Gold, and my newest being added to

right now, Rhodium. Check the charts. You can now buy Rhodium bars, not just powder. Looks better every day. 


TheDriver's picture

As did I. Funny thing though, the bank manager didn't make a single attempt to get me to keep the 20+ year-old account open. Just a simple "sign here" and "thank you for coming in today, Mr. Driver."

tmosley's picture

Where do you get rhodium bars?  It's looking awfully good about now.  Maybe not as good as silver or even gold, but I don't mind a little diversification so long as I can hold it in my hands.

sysin3's picture

With the POMOs, it sure seems like the primary dealers are buying all the stuff that the MFs are unloading.

Which would imply that the PDs will be left holding the big smelly bag.  Sweet !

Joeman34's picture

Doubt it...  If the PD's are, in fact, buying what the MFs are selling, I'm sure they'll be allowed to gun the market much higher until such time as the retail investor is sucked back in allowing the PDs to offload their [truly] worthless equities as the market finally crashes.  We've seen this movie before...

NotApplicable's picture

Replace "retail investor" with "out-of-the-know hedge-fund" or even "rip-your-face-off hedge-fund selling to clueless retirement fund manager" and I think you've got a winning formula.

Retail investors are extinct.

unwashedmass's picture


thing is, probably half the retail money has left the market, and isn't coming back. people are paying down their debt, and....excuse me, people aren't quite as stupid as Timmah needs them to be.....a good number have been severely burned by the market twice in the last ten years.....

they know the game is rigged against them....and have left...

the real question is, how much of this cash is flowing into precious metals and being socked into safe deposit boxes......looking at the activity on APMEX.com, i'd say quite a bit....

hedgeless_horseman's picture

Must there ALWAYS be a bigger fool?

Diogenes's picture

Must there ALWAYS be a bigger fool?


Until the fool killer gets them.

luster's picture

It appears the WSJ is reporting the MFI technical indicator not the mutual fund equity flow.

Howard Bork's picture

Here is your answer: $80 billion is nothing relative to the total size of the stock market and the data only captures mutual funds.  A better analysis where meaningful conclusions could be drawn would include all equity flows. 

Tyler Durden's picture

You do know just how much leverage is involved for these marginal transactions, or in this case, redemptions? Maybe a much better analysis would also show that mutual funds net cash positions are at a decade low 3.6%. And here is your comprehensive outflow analysis: http://www.zerohedge.com/article/bny-asks-if-retail-investors-are-leaving-us-stocks-mutual-funds-and-etfs-then-who-buying-sto in which BNY ConvergEx came to the same conclusion. (sorry, no bold here).


mule65's picture

Struggling folks and baby boomers are dumping their high fee extinct 401k mutual funds.  They appear to be buying gold and leveraged ETF's with whatever they have left.

Howard Bork's picture

Thanks, but this is not a comprehensive analysis – it doesn’t include pension funds.  Here is my best guess as to what is going on: most pensions allocate their portfolios in fixed percentages (e.g., 30% equity, 70% fixed income).  Given how well fixed income has done this year, these pensions have been consistently forced to sell their bond positions (likely to retail investors who are selling out of equities) and allocate the money to equities instead (forcing the portfolio make-up to stay put).  Given this, I don’t think it is at all clear what is going on with equity flows.

Tyler Durden's picture

Pension funds, especially those that are forced to liquidate, like the much discussed TRS and the recently noted ISBI, sell their most liquid holdings first. Equities are at the top of that. The TRS has had to sell $3 billion in assets, the ISBI - $1 bilion. Other pension funds which are not liquidating quite yet, like NY and
Calpers, are allocating capital to long-term investment opportunities,
mostly private equity funds, which promise 10%+ returns. To say that funds that are liquidating to satisfy distribution claims, are buying up equities, is childish at best.

(we will summarize recent NY State Common and Teachers capital allocations in the next few days).

bob_dabolina's picture

What about SWF's? CIC in particular...

SWF's can put pension funds to shame in terms of AUM.

Could be onto something here:

FED buys UST's, makes China happy, China buys stocks makes US happy.

StychoKiller's picture

And now for the good news! ........................... I got nuthin'!

Johnny Yuma's picture

From what I've seen, most pension funds (at least the big ones) have their portfolio's equity allocations in separately managed accounts (SMA's). They own each individual security/stock in the account. They work with multiple managers that specialize in a certain segment of the equity market, i.e. Large Cap Growth, etc. SMA's do not fall into the mutual funds in and out flows, correct?

Djirk's picture

Agreed this is a fraction of 1% of the total market cap of equities. I looked at the money flows and it is still not a huge number overall (and mostly looks at ETFs)

No match for the leveraged institutional buyers full of liquidity.

It is a good tell for the state of the consumers, a % their earnings do eventually go into institutional books. And the pension funds are going to face a massive liquidation issue in the next decade.

Musical chairs anyone? What did that BSD say right before a melt down...."we are still dancing"

Hedge Jobs's picture

must really shit you TD when you get junked on your own blog. These guys that want to live in denial as it makes them feel warm and cozy should be on the CNBC blog not ZH. the 2010 ICI investment company fact book shows LT equity mutual funds cash positions were at 3.6% at the start of 2010, before the redemptions started and was a 15 year low. there is $5T in assets 95% of that in stocks. 3.6% of $5T is $180 bill. $70 bill or over a 3rd of their cash has been redeemed. they would have to be selling to meet these redemptions. Its not up to us to explain why the market should be down it is up to the bulls to explain how the market is flat and not one of them comes up with a reasonable explanation.

$70bill in outflows and a flat market is clearly a massive outlier that defies logic to any rational, independant thinker.


Yearly Mutual Fund Flows & what market did that year

Mutual flows / Yearly Flows $B/ Mkt move that year

1996  /


216 / 20.30%

1997 /


226 / 31%

1998 /


156 / 26.70%

1999 /


186 / 19.50%

2000 /


246 / -10.10%

2001 /


32  / -13.04%

2002 /


-40 / -23.37%

2003 /


152 / 26.38%

2004 /


177 / 8.99%

2005 /


135 / 3.00%

2006  /


?  / 13.62%

2007 /


94.5 / 3.53%

2008 / -245  / -38.49%

2009 /


5.2 / 23.40%


GittyUP's picture

dumb money selling right into the hands of smart money.  When the public realizes this the amrket will shoot to the moon and the smart money will begin to sell off at redic P/E ratios.  Rinse.  Repeat. 

tmosley's picture

Yeah, that's right, believe yourself to be the smart money.

When you look around the table, and can't find the sucker, what does that say about you?

GittyUP's picture

I never said me.  But I know one thing about the investing public Joe Schmoe;  They are retarded.   I will not look at some indicator in which they lead the way. 


Ant the banks were the smart money in 2008.  they were wrong and still didn't end up on the losing side of the equation.  If thats not smart I dont know what is...

tmosley's picture

Making yourself beholden to the government is NOT, I repeat, NOT smart.  All it takes is for one person to get a stick up their ass, and you are through.

And smart or dumb money only applies when you are sitting at the table.  Those people are redeeming their money and keeping cash.  A very few are buying metals.  Hardly "dumb" under most conditions.  "Dumb" is chasing the latest and greatest bubble, which they are definitively NOT doing (save perhaps to some extent hte bubble in the dollar itself, but we'll see about that).

AccreditedEYE's picture

This isn't like every other time when every other time has only been the last 30 years. The rules have changed and demographics are changing. This is not the U.S. coming out of the 70's with the baby-boomers about to enter their prime spending/investing years. Take this as official notice: the game is over as you've known it. The money pouring out of retail equity vehicles is NOT coming back. You can be bullish and you can think the market is moving higher, but I would advise that you get a more sound investment hypothesis than "investing public Joe Schmoe is retarded".

Robslob's picture

Gitty...maybe your right or just maybe jobless people would rather gamble on BUYING FOOD instead of in the "Stunk Market".

homersimpson's picture

Whatever. I'm sure the "smart money" sold off before the 2008 crash - which is why the TBTF banks needed bailouts and special rules to hide their trash. Such bulltardness.

Implicit simplicit's picture

The markets are not doing that great. They had a little rally now they might have a little selloff.

Nobody knows what is going to happen, really, smart or dumb. Chance and things no one imagining happenning are what moves the market big time.

The probability of really good news at this juncture is  a lot less than the probability of news being bad.

With the way the economy is there is no doubt the shit will hit the fan once again sooner or later, and there is nothing even genius money can do about it.

redpill's picture

Wiley Coyote can run on air indefinitely as long as he doesn't look down.

bada boom's picture

MSM was hot and heavy this week on the recession being over, dow theory buy signal close at hand, and the s&p is on the verge of technical breakout.  All of this on Monday.

Yesterday, all we heard was the fed was going to do another QE.

Talk about selling it hard to retail.

We shall see next week if the tides have changed, but I doubt it.