Mutual Fund Bloodbath: Fifth Consecutive Week Of Domestic Stock Outflows Leads To $25 Billion In Cumulative Redemptions

Tyler Durden's picture

The deleveraging pain for mutual funds is never ending. Today ICI reported the fifth consecutive week of domestic equity outflows, which while not as bad as last week's unprecedented $13.4 billion in redemptions was still a massive $1.1 billion in outflows. This amounts to $25 billion in redemptions in the past 5 weeks alone, and increasing pressure for already cash-strapped mutual funds to accelerate liquidations of positions in a feedback loop. And if you have used leverage in this environment, good luck. Total 2010 outflows now amount to -$23 billion: how anyone can claim with a straight face that retail is in any way a factor for the market doing all it can to defend the 10k barrier is beyond comprehension. Once banks realize there are no reinforcements coming from the slow money brigade, watch for the selling to hit the afterburners as prop desks grasp that the first one out may be the only one not to lose it all.

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Nolsgrad's picture

you got this going back 7 years or so? I'd be interested to see if it shows it might actually be time to buy some stuff.

Jeff Lebowski's picture

Bernanke cited rising healthcare costs and the demographic swing in which there are now five individuals of working age for every U.S. citizen older than 65. In the coming years, as baby boomers retire, that ratio is expected to fall to 3-to-1, which means fewer working people paying taxes to support an aging population.

You heard it, but now you see it coming, don't you Ben?  The boomer's 401ks are leaving in droves on every down day from equities and into guaranteed funds so they can somehow find a way to retire...  And what then, Ben? 

30 years of tenure yields an average 401k balance of $210k.  Times 78 million baby boomers as of 2009.  No worries, Ben, that's only just a hair over $163 trillion dollars.

On the lighter side, this money, once removed, can be referred by MCC and Becky Quick to be on the "sidelines"...

LeBalance's picture

there is no safety in any 401k offering. it is paper.

Nolsgrad's picture

On the lighter side, this money, once removed, can be referred by MCC and Becky Quick to be on the "sidelines"...


I do all my investing based on CNBC. BUY BUY BUY BUY BUY BUY BUY

mcguire's picture

"401(k)'s and IRAs held $7.9 trillion in the first quarter of 2010"  {held the operative word}

SteveNYC's picture

I like your way of thinking, but the numbers are way, way off. There is no way 78 million boomers have on average $210k in 401ks. There are recently published stats showing that 44% of Americans (in total!) have less than $25k socked away for retirement.

I think it's going to be more dire than you said however, there are simply less and less pillars standing under this piece of shit market to prop it up. S&P 300 here we come. Grind on down baby.

Al Huxley's picture

Technically, its only Wednesday, so its possible the trend could change, but yeah, anybody dumb enough to be long this market deserves to have their ass handed to them. 

bada boom's picture

Yes, but a lot of people have been conditioned that you never sell.  Just buy.  Those mutual fund advisors all say the same thing, "Use dollar cost averaging to buy."


unwashedmass's picture

at some point, the prop desks will put it together.....

Ben bailed out the banks....not a dime to the peasantry....the peons who put their money in mutual funds.

not a dime to them.

wages aren't increasing at the serf level.

inflation -- yes Virginia, the peasants are being eaten alive by increasing costs of food and fuel -- is firing up

jobs are disappearing....

at some point, the banks will figure it out........the peasants are taking their money out, and they aren't coming back because they are

spending the money to

EAT. TO PAY RENT/Mortgage.

To live on.

And that's what happens when you've stolen just about every dime they have, when you take away the jobs......and when you have just about sucked the very breath of life out of an economy.



jbc77's picture

Great post and how right you are. The average person in the U.S is living pay check to pay check. Nothing new there but their ability to rack up mountains of debt has been greatly impaired. Cost of living percentage wise eats a large portion of American wage earners salary. This is ultimately why I beleive housing still has a ways to go in terms of price correction. Also, I think 2010 we're going to see the effects of slimmer staffing wear off because of decreased margins. Earnings will probably not fair as well as the year wears on.

mark mchugh's picture

Thanks for covering this story, Tyler.  What will the prop desks do when they realize the world's run out of greater fools?

It should be as fun to watch as a shark tank with no chum.


girl money's picture

yo, mutual fund "managers:"

most of you "managed" to lose a lot of our money during the first crash.

we've tried to manage the best we could ever since.

we don't buy the hype, the pump, the stocks, that you are pushing.

go out and get a real job like the rest of us, if there are any left.

hope you saved some of that commission money for a rainy day,

those dollars you kept no matter how many we lost.

fool me once, shame on you.  fool me twice, shame on me.

this is our goodbye.

we are whiskey gone, not just a couple beers. 

dcb's picture

at zero interest rates and access to the discount window they can do what they want.

Arkadaba's picture

A personal story - a friend who worked in the financial services industry is statistically now one of those long term unemployed and I tend to think that it is because he is on the wrong side of 50. He has applied for hundreds of jobs and I'm guessing he has landed hundreds of interviews - but nothing. Already dipped into retirement savings to cover some basics and is worried about his Cobra running out in a few months. People aren't just taking money out to put in a safer place - they are taking it out to cover living costs.

ElvisDog's picture

You friend is going to have to come to terms with the fact that his former job no longer is an option for him. There are jobs out there, but they are things like bagging groceries for $12 and hour. The key thing your friend is going to have to do is to lower his standard of living and fixed payments (mortgage, car loan, etc.) to match the new reality of his income potential.

Arkadaba's picture

I'd say he is about a third of the way towards accepting those facts. He has a part-time  job working in a retail store and is prepping his house for sale. On the other hand, he still believes he may find work in his former industry. I'm trying to help by providing some guidance on how to beef up his almost non-existent tech skills and encouraging him to think outside the box. I'm guessing there are many in the same situation as he is - and it really sucks.

i.knoknot's picture

this market is running on the fumes of auto-deposit matching-fund payroll participants (you know, bi-weekly 7% matching into the 401k, etc.), dilligently and mindlessly feeding the machine every two weeks...

nobody who's actually watching this ship is trying to get on it. many of the mutual funds are index based, and have to buy/sell based on customer allocations - not performance.

when enough of those auto-deposit folks finally get around to logging in to their web-accounts at fidelity/vanguard/tiaa/... (all good companies) and reallocate into cash/money-markets... these HFT pumpers won't have any fuel left...

should be quite the scene.

can ben 'print' enough, fast enough, for long enough... to temper the dip? ask the SNB how well that works... i have to say, ben and crew have done pretty well so far, but i think it's just gonna hurt more for their efforts.

MrTrader's picture

If there is anything to learn when retail investors are leaving the quity markets : BUY, BUY, BUY tons of equities.

unwashedmass's picture


that might have worked in the past, but the new reality is that the peasantry has been sucked bone dry. there is no money to "return" to the markets. there is no money on the sidelines left for the banks to steal. they have it all. the peasants are now using their savings to eat. and to pay the state and local taxes which are skyrocketing.

at some point, this is going to sink in. what's going to be fun is watching all the HFT boys try to pass the hot potatoes off to each other before there's a total collapse.

in short, they've killed the golden goose. its dead, not just pining for the fjords.

jkruffin's picture

How are these assholes pushing this ripoff plan forward when the comments are 90% negative and no one wants it.  This is some of Geithner and Bernankes BS.  This is just another forced savings plan that is in the top rule of how the government hides hyper-inflation from citizens, along with lying about CPI and money supply.


Administration Advances Plan to Federalize Private Pension System


Read all the public responses here:


They are trying to force this down people's throats by lying and saying people want it, when no one wants it.

jkruffin's picture

Tyler or another moderator, please get this story up on the front pages,  this is complete crapola this government is trying to force feed people.

Winisk's picture

I've been persistent in my attempts to get my aging parents out of equities.  They can't deny the background music is bad but their faith in the financial advisor (salesman) is firm.  My brothers on the other hand are playing the market, recognize the risks (not enough IMO) and think they are smart not to get out because everyone is doing that.  I forwarded that report out from BMO to them all.  The familiar refrain is that stock markets always go up in the long term. Sigh.

Joe Shmoe's picture

Tell them their financial advisor is a shill and needs to keep their feet to the fire so he can continue to get paid.  I'm an independent advisor and I've sold all my clients out of equities and into safer cash and short term high grade stuff.  I take a huge hit to my pay, but I also realize I'm dealing with real people here and these are dramatic times.  I'd rather be on teh just side (I was a Peace Corps Volunteer).

And, of course, this isn't a sales pitch for my own business... 'cause my name isn't actually Joe Shmoe (I spell it differently).  "It's never too late to do the right thing."