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Epic $23 Billion In Domestic Stock Fund Redemptions Dwarf Post-Flash Crash Outflows
While we are not sure if this is the biggest weekly outflow from mutual funds (the weeks after the Lehman bankruptcy potentially being larger), we do know that the week ending August 10 saw a near-record amount of redemptions from domestic equity mutual funds, amounting to an unprecedented $23.5 billion. This brings the total for August along to $34 billion: just $13 billion in outflows more and this will be the single biggest outflow month in ICI history. This is obviously a problem because as of the end of June mutual funds once again held a record low just 3.4% in cash. And the outflow was not limited to just US stocks: investors pulled cash from every single asset class for the third week in a row, including foreign stocks, bonds and munis. In fact, in the last three weeks a total of $67 billion has been withdrawan across all asset classes. Going back just to US stocks, this is the 16th consecutive week of outflows since April 2011, amounting to $87 billion in total outflows, and also about $172 billion in domestic equity fund outflows since the beginning of 2010. One thing is certain: there is no way that mutual funds have survived this veritable stock market run unscathed. We expect to find just which funds have blown up as a result in the next few weeks as the news of wholesale terminations can no longer be contained.
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Yeah, but CNBS says insider buying has increased at an unprecedented rate.
Sure, at the rate theyve been selling for the last couple years anything buying is considered unprecedented.
Looks like someone has been reading the news.
What was it? Like 80+ million bucks? Oooh! I am overwhelmed at the rapid pace of insider buying... You?
So if a previous quarter saw 0, then one insider buying 1 share this quarter is an infinite percent increase? I love it!
People are pulling money out of the market to buy more ipads. This is bullish for growth.
I wonder how much of this money is moving out into either ETF's or variable annuities. It would be nice to see where it is flowing to, besides the obvious flow to gold.
after getting paid for 99 weeks to sit on their asses, people now need cash to pay for the little things such as food and gas. those that are unlucky enough to have been foreclosed on, also need to start paying rent. money isnt moving into other investments, unless you consider survival an investment.
To a certain degree that may be true , but not entirely. I have a lot of clients who are moving money from mutual funds into ETF's and into annuity products.
Dr E, Help me understand this. Aren't Mutual Funds and ETFs both stock investments? What is the thinking behind moving to ETFs?
Dosen't help when The US prime money market funds portfolio allocation to selected European countries is over $730 billion.
http://www.flickr.com/photos/bankofengland/5880389613/
strange coorelation with,,,,
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s206018187]&disp=P
are the sheeple starting to get it?
wave 5 comming. then QE3
You would have to think some of this money is heading for safety else where far and away from the US. People are far more sophisticated today.
it almost sounds like a bad thing. I must have read it wrong.
Out of curiousity is this funds flow related primarily to previous month performance? or is this related to funds being less capable then underlying investors to go to a cash position?
... yet Treasuries don't head downwards, as investors "pile into equities".
Fucking bullshit. It's one big, manipulated scam, but brainwashed Keynesian economics students remain militantly ignorant, as their indoctrination tells them the Federal Reserve is gooooood.
"brainwashed Keynesian:" Redundant
"Keynesian economics:" Oxymoron
;-)
Fortunately with our New Era Economics, investors are not needed for the market. They have been replaced by far more efficient algo's running HFT's.
We need that alien attack as soon as possible:
http://lordschmutz.wordpress.com/
Gotta love the sheep
"Buy high, sell low" is the mantra of the retail investor. God bless 'em.
How are they defining outflows? The stock market is a zero sum game. For every seller someone is buying. If all the sheep are selling everything, who is doing all the buying?
People who think that buying equities at a 20% discount to where they were trading not too long ago sounds like a pretty good deal and are willing to take on the risk that they go down another 20% (or more) in the short term.
I guess MF's are a good choice for some sorts of investors, but if not for 401(k) plans forcing you into one I personally don't see how MF's have stayed in business this long. Charging 100bp+ for what they do is just highway robbery.
Mutual Funds typically allow Redemption In Kind. Fund mgr can settle with shareholders using cash or shares the fund owns; there is no obligation or duty to settle surrenders in cash. Check your prospectus.
Don't have to be anyone buying.
Of course, the shares you receive in settlement might be substantially reduced in value or even worthless by the time transfer is effected with clearance to trade, but you prospectus outlined that risk even if it didn't explain it in way you understood...
Return free risk. I would be getting my money out too if I could. God damn pozzi scheme.
Longer time series? Would be interesting to compare with '08 and even '01.
This looks pretty f**ked.
People are tapping anything they have to fund their unsustainable lifestyles. "just a little longer... just a little longer and it will get better" they tell themselves. Keep dreaming.
Think of this as a reverse flood. We need the place flooded or at least a little bit wet so that the people buying up the dry space get paid. Those people who paid for dry land need the water to flow because value of their property depends on it. (who would you rather oblige, the ones who have been fucked due to the floods you induced or the ones who have benefitted?) What happens when the levee breaks and lets all the water out? You try to close the levee and get the place flooded as soon as humanly possible.
http://www.youtube.com/watch?v=WbrjRKB586s
This is a reverse flood. The place is near dried up and the people bargaining between themselves are under the assumption that the waters will rise again. The pump is running at full volume and the sun is scorching. What happens when the people running the flood see the levee break and see their pumps continuing running at full volume? Are they going to recognize the endgame. I think so. It will be easier to close the levee when the place is drier and then restart the pump.
To think of it from their point of view hurts my head but it is what I think they are thinking. This is a levee break and it will lead to policy changes. It will result in binary policy changes, as in a 0 instead of a 1, because there are no other choices now availanbe to the pump.
People are scared shitless.... can you blame them?
It's noteworthy that the only significant inflows occured during SERP season for Wall Street....
Earlier today Lawrence McDonald reported on Twitter: "Merrill Lynch fund manager survey: highest cash balance since the #mkt lows of March 2009 @ 5.2% #FT" Not sure if this is a weekly survey more up to date. Seems likely. Still, the crush to raise capital is the most salient point. Leverage appears to be imploding.
The chart suggests that the SPY is not near a peak.
Cannot imagine any investment professional advising a client to move funds to an annuity or other cash-value insurance product.
USA is hurtling along the corridor of collapse at such breakneck speed, that I doubt annuity policy applied for today would ever be received by the client if there is any underwriting involved. I doubt there will ever be any reckonings, much less claims and settlements made on E&O policies; but anyone writing cash value insurance these days is reckless and dangerous.
Anyone who owns cash value insurance vehicles ought apply for a maximum policy loan. As insurance contracts specify carrier has 180 days to grant the loan, doubt you would ever see the proceeds, but would be worth a try. Even if Northwestern Mutual now owns $500 M in gold bullion, what is that out of an equity that is so huge?
To everything there is a season. This is not the season for cash value insurance products.
After the DOW’s record volatility earlier this month ended with a 600+ swing to the upside, many MSM pundits were championing the idea that investors had recovered their losses from the two prior days. What they never even tried to address, of course, is that the market climbed back on vapor volume and that the profile of the investors who now own the new positions is likely radically different from the ones before. That likely increased the future risk and instability of the markets.
Standing 100 ft. above the ground on a structure made of toothpicks is not the same thing as standing 100ft. above the ground on a structure made of concrete and steel. Ah, the dangers of relying on one index (like the DOW or S&P) to measure the strength and value of one’s position. But, everyone with a FICO score already knows that.
Four stock market crashes in the last 10 years and the sheeple are beginning to "get it".
They are slow learners, but they are learning. And NEVER coming back to the hyper-leveraged derivatives casino that masquerades as "the stock market".
dwarf bitchez!!!! There are no such thing as a free lunch, and oh by the way, incentives matter. Policy chickens have come home to roost!!!
I mean, fuck, man, if we read just about every week about massive mutual fund redemptions plus the fact that the retail investor is basically not in the stock market, then shouldn't all these mutual funds all be about zero? Sure, I guess retirement and pension funds are in to these, but shit, sounds like these mutual funds should be pretty much devoid of any NAV.
How about a chart since 2007 so we can see how this played out during the 08 crash? Or at least a link to the source data, please.
Edit: Link already provided.
This is fascinating ... notice from the chart above that you only get positive inflows in the months where the market has a relative peak. Or conversely the market peaks when all the dumb money have been deposited.
frontrunning bitchez
Not to worry. Insider buying will more than make up for the outflows.