Retail Investors Celebrate 32 Consecutive Weeks Of Equity Outflows By Pulling Money Out Of Taxable Bond Funds As Well

Tyler Durden's picture

That ICI has just confirmed the 32nd consecutive outflow from domestic equity mutual funds is not surprising. After all, we have long been saying that retail's love affair with stocks has gone straight to the bitter divorce stage. That the amount of outflows was a massive $2.7 billion is a little more surprising: after all the prior week (ending December 1) was just $1.7 billion, and the market really hit the after burners since then in its last ditch attempt to get the dumbest money in. It failed (and total outflows year to date are not $96 billion: we expect $100 billion through the end of the year). But what is truly surprising, and what debunks every myth that investors are now rotating out of bonds and into stocks, is that in the last week in addition to a surge in domestic equity outflows, for the first time in what seems forever, there was also an outflow of $401 million in taxable bond funds (in addition to $1.3 billion in outflows from muni bonds). Hopefully we can now leave all debate about capital rotation out of fixed income into stocks, courtesy of rising rates, in the dust (same as debunking the whole "money on the non-repatriated sidelines" falacy). In fact the only asset class that saw any inflows were foreign equities. Of course should the reverse decoupling that the "experts" on TV are predicting, and the US outperform developing markets, the foreign asset flows will promptly reverse as well. Yet the bottom line is that all who were expecting a rotation out of bonds and into equities, are proven wrong, and just as we have been predicting for 32 weeks now, equity-related capital withdrawal decisions are completely disconnected from what happens in the rates domain, and the primary objective is capital extraction. Simply said: the latest target of all outbound sector rotation is cash.

Weekly flows:

And cumulative flows - indicatively, since the market surged from its September lows, there have bee over $41 billion in cumulative outflows.


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Cdad's picture

"Retail Investors pulling money out of taxable bond funds as well."



scatterbrains's picture

I'm worried about karl D.   every time I try to load his page I'm getting timed out.. specialy since he ran that piece on dude that snapped on his local board of ed.

Anyone know whats up ?   The tin foil in me has his site getting attacked by


Stock-Paper-Silver's picture

Hindenburg 2nd day in a row, Bitchez.

boricuadigm-shift's picture

Out of Bonds and Out of Stocks.... hmmm?  Into... Yep  Gold/Silver!

whaletail's picture

Some, yeah. But the majority will hoard. Then, the QEn will debase and then all those dollars will flood the system and the Austrians will be proven right. [cue the horns of irony]

dogismyth's picture

whattya talking about??  The US Fascist regime loves splinter groups like Denninger that incite panic, chaos and more confusion to the situation.  He's a helluva guy!

Ragnarok's picture

the primary objective is capital extraction


Restores faith that not every American is a sheep waiting to be sheered.  If only theyd make the next logical step and move that cash into physical PMs.

OpenEyes's picture

the primary objective is capital extraction

Could mean that the wolves are running out of sheep to shear.  I think that quite a few folks are raiding their nest-eggs, 401K's, IRA's not to re-invest in PM's, but because they need the money to pay bills, buy stuff, continue the dance.  When there are no more sheep to shear the game is up.

Ragnarok's picture

A little of column A, a little of column B....

Rainman's picture

I agree, the housing ATM is probably being replaced with the 401-k withdrawals or borrowings. Old spending habits die hard, but this time I think people really gotta have cash to pay monthly necessity data plans for the latest handheld devices. 

Violetta's picture
Violetta (not verified) OpenEyes Dec 15, 2010 6:54 PM

"the trouble with socialism is that you eventually run out of other peoples' money".  -- margaret thatcher

Founders Keeper's picture

["the trouble with socialism is that you eventually run out of other peoples' money".  -- margaret thatcher]---Violetta

And, the trouble with free enterprise


Oh yeah!  The trouble with free enterprise is that governments eventually run out of bureaucrats.


Violetta's picture
Violetta (not verified) Founders Keeper Jan 10, 2011 1:50 AM


boricuadigm-shift's picture

I wasn't allowed to take out my 401k at all.  They only allowed it for very specific reasons or termination.  I maxed out my loan and bought precious metals back when it was 1050/17 (first time buy).  I'm repaying them in devalued fiats!  Not a bad investment at all!  :-) 


I keep exchanging fiat with PM every quarter, following harvey and others to buy the effing dips of that quarter.  Happy camper so far! :-)

SheepDog-One's picture

Move cash into physical PM's, thats good, but physical non precious metals are great as well! Copper encased lead, brass, etc.

Iam_Silverman's picture

True point, but to be serious, I would think that copper could very well be moved into the PM column here soon.  Anyone read the article where China was looking into a tri-metal backed monetary system?  Who is stockpiling copper reserves?  China, and to some extent JPM - but only because China is too!

Reload.  It is relaxing and you can see the satisfying results as the finished product build up on your workbench!  You get to handle the brass, jacketed lead, and feel the satisfying crunch as your Lee factory crimp die seals the deal.

pamriallc's picture

consider that in waves, people will pull funds from the debt side and rotate to the equity side.  due to the relative "myth of stability" with respect to bonds vs stocks, we witness that people re-rotate back toward the equity side much more carefully.  huge franchise businesses are *CHEAP* and as such, will be the willful recipients of the cash over the next few years while the *junk rally* we have witnessed will fade into memory like those "uber-hot" leasing stocks people priced like an internet bubble--- as in the 1970's.  quality will again reign supreme.  patience will be a necessary virtue.  we would rather rather load our portfolios with CVX, MO, COP, PEP, MCD, PFE, MRK, LLY, XOM, KO, WMT, CSCO, MSFT, INTC at an average P/E of 9X (after deducting all of the cash per share) and get an after-tax 11%+ earnings yield for 10 years (plus inflation) vs (even) a 7% 10 year bond.  not particularly difficult work, but it takes patience so no one wants to do it.  Shawn A. Mesaros, Pamria, LLC

Bill Lumbergh's picture

I believe data would actually support people are more heavily weighted (at least prior to all these withdrawals) equities than fixed income.

IQ 145's picture

 Like the generals in WW I you have the perfect plan for the last war. It's not going to happen. growth exists in the past tense. crash and burn doesn't pay returns in the stock market.

max2205's picture

Looks like the trend is decelerating Buy the tail!!!

unwashedmass's picture


you have to wonder when these morons are going to figure out that the peasants -- who now have had every dime stolen from them, and don't have jobs, or if they do, are trying to keep heads above the non-existant inflationary waters -- when these idiots praying retail will come back to take the stock they pumped to the moon off their hands.....

when are they gonna figure out they've taken EVERY FRIGGIN' DIME FROM THE PEASANTRY and there is no more to steal???

SheepDog-One's picture

Exactly right, WHO does the FED believe is available for endgame, that is dumping their trillions worth of stocks and bonds to is beyond my comprehension, and the only real relevant question!

This is the fuking Underpants Gnomes!!
Step 1- Collect underpants.
Step 2- ??
Step 3- PROFIT!
Exact same fucking thing!

Cdad's picture


Step 1- Collect underpants.
Step 2- ??
Step 3- PROFIT!


dogismyth's picture

the Fed is only doing what its alway meant to do...and that goes for all the Central Banks.  They have no use for fiat currency and could care less what they pay for treasuries and other bonds.  They are simply buying the Titles to all the world's property and land.  They'll control everything through default.

merehuman's picture

BINGO!   Dogismyth has it!

Critical Path's picture

The second chart looks oddly similiar to net government revenues

random shots's picture

How about a comparison to 2000 and 2007 (market tops)?

I Am The Unknown Comic's picture

I am 100% confident that capital outflows are good for stocks.  It's ALL good (and don't you ever f#$king forget it you rebels)! 

TheSettler's picture

investors are rotating out of bonds and into stocks ?????


is this not backwards?

SheepDog-One's picture

Nope, investors are rotating out of stocks as well, and rolling towards the gun store.

Founders Keeper's picture

[...investors are rotating out of stocks as well, and rolling towards the gun store.]---SheepDog-One

Rotating into gun stores.


Twindrives's picture

Buy the dips, in ammo prices.

Spalding_Smailes's picture

Buy the fucking dip'

Spitzer's picture

Your buying US bonds here ?

Spitzer's picture

don't insult me like that. I would not buy US treasuries with ben Bernankes money

Problem Is's picture

32 Weeks of Increasing Cash on the Sidelines
Now, let's go to our head dickweed correspondent Dennis Kneale to tell us why this means a big surge in equities ahead...

homersimpson's picture

Don't worry - Harrywanger has been propping up Nasdaq with his APPL purchases.

doolittlegeorge's picture

and yet again you hit upon something terrifying but fail to note it.  it's not the "imminent 2008" scenario but instead "that foreign outflows will be reversed."  this is in fact where "the debt lards" have been "going great guns for growth."  in "safe foreign lands."  indeed "should those foreign fund outflows actually be reveresed" you will see a dramatic a material impact upon those who basically see the imminent debt apocalypse as "nothing equities can't shit upon on their way higher."  phucking pigs--"always claiming greater equality than all the rest."  i say DRAW THE LINE AT HAPPIUM!

tmosley's picture

Is everyone getting cash to stuff in their mattresses, or are they getting cash so they can go buy gold at the local coin dealer without alerting their respective governments?

SheepDog-One's picture

Getting some rifles and cases of ammo as well. People think someones money has to either be in stocks or bonds, most people now have neither. Roll to the Costco and gun store, stock up.

Violetta's picture
Violetta (not verified) SheepDog-One Dec 15, 2010 6:59 PM

now boys, let's play nice.