The Mystery Grows: Goldman Finds That Virtually Everyone "Sold In May"

Tyler Durden's picture

The great mystery of the endlessly levitating market continues to confound everyone, even Goldman Sachs. Because while the market soared in May (and has continue to surge in June) contrary to the sell in May mantra, when peeking beneath the market's covers, Goldman has found that most investor groups did just as they are supposed to do for this time of the year: they sold!

From Goldman's David Kostin:

While many investors puzzle over the decline in 10-year US Treasury yields to 2.6% alongside the S&P 500 at an all-time high, recent data suggest they moved flows in the same direction. Mutual fund, futures, and ETF data show a shift away from stocks and towards bonds during the past month. Pension funds have also sold stocks and bought bonds in 1Q. Equity market performance supports a pro-risk stance offset by a muted return outlook given high current valuations.


US equity flows have weakened during the past month with outflows from US equity mutual funds totaling $10 billion since April 30. The outflows have been broad-based with all categories affected other than Equity Income funds. The preference for yield is also evident in continued strong flows into taxable bond funds as well as outperformance by stocks with high dividend yield. Small-cap funds have experienced the largest outflows consistent with Russell 2000 lagging the S&P 500 by 625 bp YTD (5.9% vs. -0.3%).


Flows are also weaker in relative terms as both bond and international equity funds continue to receive inflows. During the past five weeks $12 billion was withdrawn from ICI domestic equity mutual funds. Meanwhile, $7 billion moved into international equity and $11 billion flowed into taxable bond funds. Both hybrid and municipal bond funds also had inflows. Lipper fund flow data shows a similar but less pronounced trend with $8 billion of outflow from domestic funds in May of which $7 billion was small cap funds.


The combination of fund flows has pushed our Rotation Index to its lowest level since June of last year. Recent flows suggest a modest preference for equity allocation but less risk appetite than during the past year or compared with previous bull markets. The index estimates the risk appetite of retail investors based on the mix of their fund flows as compared with their base-line mutual fund allocation across money market, bond and equity funds. Margin balances in retail brokerage accounts have also eased from very high levels implying less retail risk tolerance.


Institutional investors have also reduced exposure to US equities. Net equity futures positions of Institutional and Levered Funds have declined to $68 bn at the end of May from $92 billion at the start of April (Exhibit 4). The shift has been caused by large growth in the net short exposure of levered funds. Net futures sentiment is below average but has rebounded from very low readings last month. Broad-based short ETF exposure also continues to rise across major indices.


Pension funds have also been selling stocks and buying bonds this year but the pace has outstripped our estimates. Yesterday’s release of the Federal Reserve Flow of Funds report showed pension funds sold $42 billion of equities during 1Q ($168 billion annualized). The outflow is already 7x our initial 2014 annual estimate of $25 billion. Public rather than private pension funds dominated the equity selling. Assets shifted to short-term bonds.


And yet:

Changes in positioning do not appear to be driven by event or growth risks and may instead reflect fatigue post strong valuation expansion. The options market does not suggest higher event risk as the VIX fell below 12 last week (5th percentile since 1990) and 1-month skew is at its average level over the past 10 years while realized volatility was just 8.2% in May. Low volatility may persist as the average VIX regime lasts more than 3 years.

What is the conclusion by the firm which has a 2014 year end target of 1900, and whose June 2015 S&P 500 price target of 1950 was just hit on Friday?

Performance at the stock level is consistent with high risk tolerance but high current valuation suggests limited upside. Firms with lower return on capital, high realized volatility, and weaker balance sheets have all outperformed peers by about 200 bp this year. However, stocks with high dividend yield are also outperforming as modest upside and low interest rates make dividend-paying stocks attractive from a total return perspective.

So what's going on? Simple: one massive, ongoing, relentless short squeeze:


Finally, as Zero Hedge revealed, everyone else may be selling (or shorting) stocks, but here is who is buying with zero considerations for cost or value:

Of course, since neither facts, nor news, nor events, nor anything matters in a centrally-planned market, just BTFATH.

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LetThemEatRand's picture

It is difficult to decide which is more irritating:  that Goldman pretends that it doesn't know what is going on, or that a lot of people still believe and listen to them.  

Aaronson.Jones.Rutherford's picture

All trades need 2 sides, if people are prepared to listen to Golman et al then they deserve what they get; it's financial Darwinism so to speak. I find Goldman irritating, I find those that place any trust in them just plain silly.

knukles's picture

Reference the Fed's balance sheet "Other Assets" and Paul Craig Roberts web site article about EuroClear and Treasuries, put a line between two point (or three at the most) and you"gotchur azner"

LetThemEatRand's picture

"America is a Great Big Lie. There is no truth in what we are told. The entire country, along with that part of the world under Washington’s thumb, is run for about six private interest groups. The rest of us are being fleeced."  -- Paul Craig Roberts, 6.6.14.  PCR is the most notable defector of the mainstream system I can name.  That he has the balls to come out and call the entire system a lie is astounding.   Anyone here who is not reading him regularly should start.

The International Jew's picture

Listening to financial advice from zerohedge commenters is like watching that drunk guy superman dive off that bridge facefirst into the concrete pillar below.  Brilliance at its finest.

LetThemEatRand's picture

So are you just a Goldman apologist, or something more?  I've read some of your posts of the last week or so since you joined ZH, and truth does not seem to be a passion of yours.

The International Jew's picture

Goldman fucks muppets, no one doubts this.  You really think those CLOs are worth anything?  You really think they are being packaged... correctly?  No one with a brain would.  Congradulations!!!  You beat out the average moron.  Now how much have you been actually paying attention to the crap you spew? 

Does every new opinion thats not yours still cause you to get your panties in a bunch?  Oh it does?!?  Well shit, once a muppet always a muppet, right?  Well damn if Goldman's so bad lets just counter every bet they have!  How's that been going for you?!  Oh thats right, you don't actually trade or pay attention to the shit you spew.  Once a muppet, always a...

LetThemEatRand's picture

"Well damn if Goldman's so bad lets just counter every bet they have!"

Why would I want to bet against the house?  I stopped actively trading some time ago when I figured out that the casino is completely rigged, with Goldman playing a huge role via their proxy, the Fed.  Hard to compete with an institution that has an open credit line to bet against me (a credit line that I am supposed to pay back in taxes one day).    What opinion is it that you have, exactly?  So far, all I've read from you is attacks on ZH posters such as the one above.

The International Jew's picture

Dude no one on here posts shit positive about Goldman.  No one is going to.  Ever.  Everyone on here hates bankers.  Most would slip them the shiv if they had the chance.  No one here like Barry.  No one here likes the 80% jews at bilderburg figure.  No one here likes the bail out wallstreet and run up debt to fund research into what part of the penis is the most sensitive.  Yes I remember that story.

But for how long will you condemn everything said, just because it comes from the mouth of a negative source.

Please, stop letting the faucet dictate the taste of the water.



The same tactic gets used on the TV.  Tell the muppets the truth, from the only guy who looks, acts, and sounds like a crazy person.

They don't just use the good looking guy with nice teeth and big muscles, to spread the lie.

They use the tinfoil hat guy to spread the truth.  So please, for the love of all fuck, realize Goldman has to make good calls every now and then, ortherwise, they would be the easiest trade to kill. 


Don't ignore who the source is.  Pay close attention to that, and afford their message less power if you agree with them, and more power if you disagree. & remember, if you want to know who is a muppet, ask them to explain something.  & if they give you an opinion, ignore them.  If they give you an exact memory or experience - an example - listen to them.  They have no opinions, only facts.


LetThemEatRand's picture

So basically your opinion is that everyone here hates bankers (presumably including you, though you don't come out and say it), but we should go along with what they say?  That would make you the ultimate muppet.  Don't worry, I'm sure they will give you advance notice when they decide to change the bet to short and/or lose control over their own casino.  

The International Jew's picture

I'd advise you to read that again.  The answer you are looking for is already there.


& no, but I'd expect them to telegraph it.  & that is why phys silver and LTC are my trip.  Cus they pop.  Of course that isn't all I choose to do.  I like to study, to see what else I can do.

LetThemEatRand's picture

The answer I am seeing from you (in the part of the post you added while I was typing my response to your earlier, shorter version), is that "Goldman makes good calls" sometimes, and your advice seems to be to try to divine when they are lying and when they are telling the truth, and keep on trading.  My point stands that you are the biggest sucker at the table and/or just a shill. 

The International Jew's picture

LOL  How you devine that information is up to you.

But I'd stop paying attention to who says what, and start paying attention to how things work.

People lie, people are inconsistent, and people are generally shitty.  Especially when they disagree with you.

History is a good start to begin examining.  Maybe if you can't 'devine' what's going on, you should spend less time talking, and more time trying to figure out how things work, regardless of who is talking or spreading information. 

The International Jew's picture

here's 2 bones:

All those youtube channels that spew crap about the fed and gold and silver.  They are dumb.  They want views.  & the muppets that figure out just a little bit, give it to them.  Why are the people that still watch these channels, muppets?  b/c these channels, with exception to rawdawg and silvfut, HAVEN'T MADE A CORRECT CALL EVER.

Here's another bone.  If time = money, and time is happening to the economy now, then it should be improving, however slowly it is.

& that should actually cause you to see greater opportunities, and you should stop being so negative and start looking for them, and then helping others.  At the same time it should also cause great problems, b/c stagflation is a bitch like that.

Some learn, others don't.

GetZeeGold's picture




Look little fella.....the only reason the markets are at all time highs is because we are printing money and propping it up.


Do you really think that can go on forever?

The International Jew's picture

you couldn't have missed the point more.  try reading the words without assuming what will be said next... its more suspenseful that way.

kliguy38's picture

"start paying attention to how things work" heheheh.........I believe WE do know how thinks work shithead and YOU DO take your spew and swallow it .......we've heard douchebags like you for years here..and you're all a bunch fo disinfo slime

James_Cole's picture

Geez international, you need your own blog, clogging up so many threads. 

And I like bankers (i.e. people working in finance) depending on who. And definitely there are some folks on here who also work in finance, I'd bet they don't all hate themselves. 

GS has its own interests and anyone reading them obviously needs to take that into consideration. 

Aaaarghh's picture

Ignore the TRoLL...Dont feed the TrolL, hes only been here over 1 week.

Manthong's picture

“All trades need 2 sides”

Not any more..

JPM, GS, Kevin, the bullion banks et al are the market.. buyers and sellers of the same thing at the same time..

That is why we are in the mess we are in.

economics9698's picture

International, get rid of the tribe infested Federal Reserve and we will have a fair fight.  Until then shut the fuck up cockroach.

Calmyourself's picture

Jsmes backing lter so surprised no really #surprised...

TheRideNeverEnds's picture

yes, we are missing the only chart that matters.  S&P vs fed balance sheet.  


We are still slightly undervalued per the FED balance sheet but basically fully priced.

sessinpo's picture

The Internation...    Here's another bone.  If time = money, and time is happening to the economy now, then it should be improving, however slowly it is.


You might want to throw that bone out. Time can equal money. But it is the efficiency and productiveness, or how that time is spent that matters.

Just that fact that time is passing does not equate to improvement.

LetThemEatRand's picture

Going back to my original post, to which your responses add nothing other than obtuse statements that seem to amount to nothing more than to say that everyone lies so get over it, I'll add an "/or" to the last bit:  "It is difficult to decide which is more irritating:  that Goldman pretends that it doesn't know what is going on, or that a lot of people still believe and/or listen to them."  You may have the last word and give us more thoughtful insight, such as "people lie."

The International Jew's picture

I'll leave this post here for 'DISCERNING' PEOPLE.

Read everything here, study it well.  Let the idiots stay idiots, and the smart rise.

fourZero's picture

I have yet to see you make a salient point, just nonstop spewing of unsolicited, vague fatherly advice.

kliguy38's picture

yup...pure bullshit......a paid troll

NidStyles's picture

Oh don't worry, I think most of us know who the real idiot here is.

Okienomics's picture

I'm trying to divine what the hell the two of you are talking about.  Your lips are moving, but I can't hear anything.  (okay, your fingers are moving, but nothing meaningful seems to be coming out).  Alrighty, there, big blue eyeball, tell us something insightful and useful about how things work.  All I got here is blah blah blah.  Did I miss some deep subtle insight?

The International Jew's picture


Read books by William Stuart for the history of the world.

There are some twitter users that actually post good trades. (carefully watch.  For instance that 'sellputs' guy and his partner, trade forprofit.  They have like 10000 + followers!  LOL.  & these guys post dogshit trades.  They told their followers to go long WTI at like 110 just b4 it plunged. (one of many shitty trades, like buy the dollar at 83-84).  I wouldn't listen to them.  I remember a time when Goldman or JPM made an excellent release about Natgas being too high, and people should short it, and for the next 30 days it fell).  The simple of the message:  Don't pay attention to what is being said, b/c of who is saying it.  Find methods to determine if what they are saying, makes sense, and actually panned out.

& even when you think someone is trustworthy, or untrustworthy, they may astonish you with some great insight.

I'd start with William Stuart, and then study austrian versus keynesian economics.  In great detail.

Later if you want to try trading, be discerning and study from those who have made the right calls.  & almsot no one else.

kliguy38's picture

thanks obee one kanobe..........I'll stay tuned for moar insight....meanwhile you play the paper casino.....

The International Jew's picture

it really is true though.  the elite will always run the world, b/c none of you are smart enough to see beyond your own nose.  & this punishment you are going through, is directly a result of your inability to understand the truth.


Later muppets.

kliguy38's picture

thanks douche and as long as patriots such as yourself exist then we'll always have need for firing you morally malleable squid

The International Jew's picture




pizza time later bitchez

quintago's picture

Yeah, they sold to Goldman who probably knew ECB was going to go negative. Now the whole world is going to become NIRP fearing serfs and pile into the market.

mccvilb's picture

Okay, Teddy Kaczynski, who's the ZH punker who gave you access to a computer terminal? Or else someone at the Onion's pranking us. Nobody could be this stupid and be proud of it.

Aaaarghh's picture

Hey its no fair, International troll gets paid for the shit they post on here :(

NidStyles's picture

The idea that you are protected by playing their game is amusing. I used to be protected, until I opened my mouth. Now I'm watched instead. 


They will turn on you just as they have turned on me as well. You are not special, you are merely another mouth to feed to them.

Muscletonian's picture

I have been on here for years, and I must say that you silly idiots not realizing what The Interrnation is saying are as doomed as all the other idiots out there.


I have a swedish passport, but for sure I understand more english than any of you pity assholes. Read what The Internation. says instead of arguing for nothing, a bunch of piss ants would do better.. Yeah, please say Im a troll now as Ive been here longer than any of you, fuck off and get a life that matters. The only  thing Ive seen (today) re The that its firm standing in difficult matters (but I will more lean to his (I bet) rightness, than the opposite).





Tall Tom's picture

Stealth account. He has been here for Three Years and has made FIVE POSTS...all dated TODAY.

fonzannoon's picture

I up arrowd him for ending with "pizza time" because that was the perfect way for him to end it. I wasted 5 mins reading it thinking he was "special" and "pizza time" gave me the visual of him falling off his chair and runnng that windmill type run while his mom puts his pizza on the table next to his juice box.

Muscletonian's picture

I have been on here for years, and I must say that you silly idiots not realizing what The Interrnation is saying are as doomed as all the other idiots out there.


I have a swedish passport, but for sure I understand more english than any of you pity assholes. Read what The Internation. says instead of arguing for nothing, a bunch of piss ants would do better.. Yeah, please say Im a troll now as Ive been here longer than any of you, fuck off and get a life that matters. The only  thing Ive seen (today) re The that its firm standing in difficult matters (but I will more lean to his (I bet) rightness, than the opposite).





Tall Tom's picture

Stealth account. He has been here for Three Years and has made FIVE POSTS...all dated TODAY.

Death and Gravity's picture

That douche behind the monitor really loves hearing himself blabber, doesn't he?

Superdude's picture

I think I understand your point, take in all information, no matter the source and trade accordingly. That is good advice, in normal times, when logic is easy to follow. The reason why you are getting such a reaction from the community here is that this issue has been hashed out numerous times over the years, the end result of the debate you are engaging in is that there is no logic to follow. There are insiders, that have access to information not available to most that enable them to win, daily, as in every day. You may find some sort of pattern that works for you, but the end result is you're taking a chance because unless you get word from one of the big shots, you're system is not as foolproof as you believe it to be. That's a fact, many times the big players have gone against wisdom and what makes sense. There are some general patterns for sure, but in no way does that make the system easy to follow. As such, most people here take the long-view on wealth security and survival and hedge accordingly, moving into areas that have historically survived significant changes in societies.

sessinpo's picture

The Internation...   Later muppets.


Another muppets bites the dust. And another one's gone and aonther one's gone. Another muppet bites the dust.

See ya International.  Don't let the door hit you where the Lord split you.

alexcojones's picture

Dear Mr. International Jew,

   I hope I am not being anti-Semitic by addressing you by your "Chosen" name.  Here on ZH, I have realized most of us are being paid forward by the Content & Quality of our posts.  Not the Quantity.

Forget the Austrian vs Chicago debate and Go Learn something from the Master:

When you can snatch the pebbles, little grasshopper,  from MDB, then return to teach us the Highest Wisdom of Trolldom.

cocky roach's picture

Is it just me or has the quality of shills really gone down?
I guess the crisis really is affecting all markets...


The Internation, get lost dipshit. Your tricks don't work here.