Once Again, Retail Investors Are Piling Into a Bubble Near the Top

Phoenix Capital Research's picture


One of the primary themes for this letter over the last few months has been the potential of a major market top forming. We now have what I can only call “numerous bells” ringing.


First and foremost, I want to alert you to a disturbing trend in stock mania. That trend pertains to money inflows to stock mutual funds.


One of the best means of gauging investor sentiment for individual investors pertains to how they move their money in and out of mutual funds.


For example, from 2007 until the end of 2012, investors pulled over $405 billion out of stock based mutual funds. Over $90 billion of this was pulled in 2012 alone: the largest withdrawal since 2008.


In contrast, over the same time period, investors put over $1.14 trillion into bond funds. They brought in $317 billion in 2012: again, this was the most since 2008.


This marks quite a reversal of asset class fund flows: before 2008, stock funds usually took in $2 for every $1 investors allocated to bond funds.


However, this trend reversed back to normal in 2013. The Fed finally succeeded in inducing investors to move into stocks again. And they have done so in a big way. Thus far in 2013, investors have put $277 billion into stock mutual funds.


This is the single largest allocation of investor capital to stock based mutual funds since 2000: at the height of the Tech bubble. That year, investors put $324 billion into stocks. We might actually match that inflow this year as we still have two months left in 2013.


Indeed, investors are reaching a type of mania for stocks. They put $45.5 billion into stock based mutual funds in the first five weeks of October. If they maintain even half of that pace ($22.75 billion) for November and December, we’ll virtually tie the all-time record for stock fund inflows in a single year.


That record, again, occurred in 2000. At that time the NASDAQ had just staged a massive bubble rally.



What followed was one of the worst market collapses of all time:




Be forewarned.


For a FREE Special Report outlining how to protect your portfolio a market collapse, swing by: http://phoenixcapitalmarketing.com/special-reports.html


Best Regards,


Phoenix Capital Research









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Dull Which's picture

How many weeks does October have?

carbonmutant's picture

As long as the Institutions are buying Retail will follow...

orangegeek's picture

All lemmings on board!!!


Bring your life's savings.


Eveyone's a winner!!!!!!

RaceToTheBottom's picture

No big change can occur without the Muppets.

All aboard!

drdolittle's picture

I'm done shorting this bitch so it'll probably go down this time.

There are no markets anymore.

WordSmith2013's picture


They are setting things up for the final SUCKER's RALLY ! ! !

How many more BUBBLES have to pop before the small investor gets it?!



"All of us have seen bubble after bubble grow and balloon, and merge and overlap, and inextricably interpenetrate each other, until all we have is one massive bubble ready to pop.  But, when will it pop?!

It will pop when the confidence level is sufficiently undermined by the very same MEDIAthat controls the flow of the relevant information.   And who, pray tell, controls the media, if not ‘The Invisible Hand' ?" 

... ... ...


TzaristBondHolder's picture

Maybe bubble-investing is a great strategy...as long as the bubbles are drinkable.  Instead of equities and gold investors can make a bundle with Australian wine as an asset class http://www.imoneywealth.com/blog/investing-australian-wine

Bearwagon's picture

I am kind of lazy today, so I'll just hint at good ol' John P. Hussman, who nails it: http://www.hussmanfunds.com/wmc/wmc131111.htm

Razzle Dazzle's picture

Starting to feel silly believing the bubble mantra. Balls deep in gold and there is no end in sight. MSM keeps pumping out good news... lower unemployment, stocks up.. FED seem to have the game stitched despite whatever is really happening. Gold will be hammered by QE or Taper. I can only see recession/deflation which is the biggest argument against gold. Hyper inflation is a long shot. The sheep are asleep and FED is free to print without recourse. These are only book entries anyway, debt can be wiped, and who's going to buck up. I am pondering cash in all gold and gold shares, despite the long wait and massive losses? I am at a loss for rationale on this one. Still searching for the black swan, if there is one.

SWCroaker's picture

As a fellow bug, with similar thoughts, I'd like to add more for your mix:


  • We know the price is set by wild & crooked shenanigans with (worthless) paper (pm contracts, not those other worthless paper thingys called bux)
  • Should reality hit, the worthless paper will likely be priced worthless, or $0.   Not infinity; the reaction to the revelation that contracts are massively rehypothecated garbage won't be to buy them with both fists
  • That paper price on the way to $0 will likely be honored by physical transactions for a brief period, if at all
  • The East is likely to insist on proper valuation of PMs when things go belly up, but...
  • Until things go belly up, the East seems at a minimum content to buy on the cheap; they are not forcing prices higher
  • There is evidence that points to the perpetual fire sale from West to East as being a cooperative venture (payback for past thieving? concord forced by strong over weak?)  *Both* sides seem content with the pricing and movement it is inducing.
  • The West may be conniving, crooked, and speak with forked tongue, but they are not stupid.  What plans could they have for retaining preeminence in a world where they are revealed to be paper kiters and possessing no gold?  What leverage/tool/weapon/ploy pops out when the wrestling that is going on comes out of the shadows?
  • In the 80 gold spike, the US *was* the bullion market, and both the metals and the miners were at play with US funds.  Today, the East buys bullion, no-one on the planet but loonies like you and I buy miners, and US funds are happy to float the POS of the day in HFT games.  Ownership of extra-country mines, through the vehicle of US based equities markets, might prove to be problematic for the East.   If so, after the gloves come off, bullion may have cross-border appreciation in price while miners may be very much an in-country situation.  So while history shows that the miners lead the bullion, this time around the entirely changed market may indicate a different outcome.

Long, strong, sick to death of this BS and related nausea, stubborn enough to go to the grave holding this pose.

RaceToTheBottom's picture

Do nothing is an operative strategy now.  Be tactical; reduce costs, shore up job and savings.

Forget you own gold.

danepol's picture

Don't do it, Razzle. You will convert your paper loss to a real one, and then suffer the added pain of watching your original hunch prove true when you are no longer able to benefit from it. This nonsense will continue as long as the Fed keeps pumping but fall apart it eventually will, and your black bird will be there to welcome you.





MythicalFish's picture

The T word, the nth time. One day it will work.

max2205's picture

Blah blah bla...GS, even if this is a top, no way you get credit for the call

Redneck Hippy's picture

A few months ago, the market was topping because the retail investor wasn't interested. Now it's topping because the "dumb" retail money is coming in to be slaughtered. I wonder what the reason will be in 2014?

The retail investor doesn't have enuf money to matter to this market, anyway.

Haager's picture

But this is not the top, at least not the one we're looking for. 

Coldfire's picture

No. This time is different. Because QE...

new game's picture

both feel toppy. is that a word? toppsy. tip top. tippy toppy!

both bonds and stocks are scarey. risk/reward-not good.

really, ya don't say...

no news, just watchin gold.

right at support.


andrewp111's picture

I grew up with a cat named Topsy and a cat named Turvy. They both lived about 12 years until Feline Leukemia got them.

pitz's picture

Could still be a long ways up if there's significant selling in the bond funds and a re-allocation to stocks.  $1.5T net into bond funds, and you're complaining about $300B going into stock funds?  Seems the bond funds are the giant bubble waiting to pop. 

SAT 800's picture

Yeah, you gotta good point there. Even if the Bond Funds don't pop but just let a little air out around the edges it could still be pretty significant.

Platinum's picture

On the upside, the holiday sales will be insane.

World of Debt's picture

It sure feels that way!!



World of Debt's picture

It sure feels that way!!



ebworthen's picture

Man people are stupid.

P.T. Barnum was right:  "There's a sucker born every minute."

You'd think people would remember 1987, 2000, or 2008; the young have an excuse but the Gen-X'ers and the Boomers don't.

Hobbleknee's picture

People do the same thing (buy at the top) with gold too, despite all the cries of BTFD around here.

rationaldemocracy's picture

Boomers never learn anything


akak's picture

So you self-identify as a Boomer then?

rationaldemocracy's picture

Ok, boomers and young white men who think Ron Paul is God

and I don't identify as either

lordbyroniv's picture

But this time MAY be different...no?


Weimar anyone?


Equities worked !

Burticus's picture

Stairway up.  Lemming cliff down.  History repeats.

LouisHill's picture

He has the wrong charts up. notice the date. Where is the volume chart for 2013?


JamesBond's picture

The author is trying to show you an historical perspective.  Well, and to sell you his newsletter but he is always trying to do that.




That record, again, occurred in 2000. At that time the NASDAQ had just staged a massive bubble rally.

RafterManFMJ's picture

Good Lord! Just tell me if I should buy Apple or not!

SAT 800's picture

NO. no apples for you; eat your peas!. Seriously; this is a wonderful indication of a top; by definition it's the mass mind that causes, preceipitates the final stage of any bubble. And, of course; it's still very difficult to say when they'll finally be startled by their own shadow on the wall and start shouting Sell! Sell! Sell!; in stead of Buy! Buy! Buy!; but they hve a perfect record so far. It sure looks ripe to me. But I'm not really a stock market person; I thought for sure the stock market was completely ridiculous in 1999; and it just kept raging on. So, it's hard to say. But if you have profits from this recent "explosion" in "values"; this would be a very wise time to take them. It's not good arithmetic to try and get another 6%; or something, and risk losing 15%. Especially when you could put some of your profits in Silver at such an attractive price.