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Relentless Equity Outflows Continue: YTD Mutual Funds Redemptions Surpass 2010 Total, Despite Broad Market Squeeze

Tyler Durden's picture




 

If the purpose of the forced short squeeze between stocks and the EURUSD was supposed to get retail investors back in the rigged casino, it has failed. In the week ended October 19, yet another $3.5 billion in funds was redeemed from domestic equity mutual funds, with all of it and then some once again rotating into fixed income funds, which even despite offering persistently record low yields, continue to be far more attractive to Joe Sixpack than the joke of a centrally planned policy yoyo that has become the US (and global) stock market. And in the meantime, baby boomers who need stable sources of annuities (read: not equities, not even the bubble that is dividend stocks) are not getting any younger. In addition, after this week, the 10th sequential outflow in a row, we have now surpassed $100 billion in outflows from domestic equity funds, and with it the total outflow of all of 2009. With mutual fund cash at all time record lows, or just about 3.4% the smallest tremor in risk assets which forces mutual funds to mark equities to fair value instead of "to short squeeze", will likely set off a liquidation wave unless enough new capital mysteriously appears to fill what will be the equity hole, that will serve as a springboard for even more redemptions and so on in the mutual fund death spiral.

 

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Wed, 10/26/2011 - 16:58 | 1814202 midgetrannyporn
midgetrannyporn's picture

there is no retail, there is only the bernank.

Wed, 10/26/2011 - 17:04 | 1814215 depression
depression's picture

I miss the old days of "buy and hold" and "dollar cost averaging"

Still works pretty well in the Gold market, but the average retail with an IRA or 401-K cannot access these markets easily (other than paper GLD iou's.)

Wed, 10/26/2011 - 17:05 | 1814230 deez nutz
deez nutz's picture

who needs retail investors with bernanke and sack in da house?

Wed, 10/26/2011 - 17:08 | 1814234 I think I need ...
I think I need to buy a gun's picture

everyones account has to go to zero before the event

Wed, 10/26/2011 - 17:12 | 1814244 MillionDollarBonus_
MillionDollarBonus_'s picture

Thankfully I own US treasuries as hedge against this type of event.  These outflows have no where else to go but safe-haven US treasuries. I just feel sorry for those who aren't part of the game, and haven't yet bought into the treasury bull market.

Wed, 10/26/2011 - 17:49 | 1814327 Pure Evil
Pure Evil's picture

 

 

Hurray for you!!!

Nothin like going FULL RETARD by trading worthless FRN's for worthless Treasuries.

With this latest post, you've fully morphed into Bernanks offical brown noser and kiss up.

Wed, 10/26/2011 - 17:56 | 1814343 NotApplicable
NotApplicable's picture

Please allow me to introduce you to Satire.

Wed, 10/26/2011 - 17:59 | 1814349 Pure Evil
Pure Evil's picture

 

 

Allow me to introduce you to knuckles sandwich.

If you think that guy is being satirical, then you've climbed Mount Full Retard.

Wed, 10/26/2011 - 17:59 | 1814350 css1971
css1971's picture

So which one of you two guys is Laurel, and which Hardy?

 

Wed, 10/26/2011 - 18:15 | 1814411 Pure Evil
Pure Evil's picture

Now, that's satire.

Wed, 10/26/2011 - 20:18 | 1814944 mophead
mophead's picture

So now we know where the market is going: higher.

Wed, 10/26/2011 - 17:18 | 1814255 GenX Investor
GenX Investor's picture

Why put into a 401k when you can pay off debt?  That is the best return on money for most people.  Joe-Sixpack would earn over 17% on repay credit cards, over 7% paying off that car, over 7% paying off that second mortgage...  Don't give it to the 1%'ers on Wall Street, pay it to yourself...

Wed, 10/26/2011 - 17:33 | 1814299 spongeBOB
spongeBOB's picture

Unless you don't pay back your debt.

Wed, 10/26/2011 - 16:58 | 1814204 Irish66
Irish66's picture

Now people are getting it right

Wed, 10/26/2011 - 17:18 | 1814256 tankster
tankster's picture

"Mutual fund death spiral" to add to the equity death spiral to add to the treasury death spiral to add to the euro death spiral? Why am I thinking of economists? Maybe your just early (wrong). Junk away.....

Wed, 10/26/2011 - 16:59 | 1814206 LawsofPhysics
LawsofPhysics's picture

Ben will have the capital to fill the hole, click, there, problem solved.

Wed, 10/26/2011 - 17:02 | 1814217 spiral galaxy
spiral galaxy's picture

Ben's money. Ben's market.  Do as you will.  For the rest of us, just stay the &*%# OUT!

Wed, 10/26/2011 - 17:02 | 1814218 Christoph830
Christoph830's picture

Note to the SEC and Fed:

While you may like the fact that HFT bots can prop up your joke of a "market," the wild daily swings we have seen over the past year are scaring away retail investors permanently. Bots are the problem, not the solution. You can't have it both ways!

Wed, 10/26/2011 - 18:01 | 1814357 NotApplicable
NotApplicable's picture

Whatever makes you think the Fed and the SEC want retail investors? Don't you understand that they aren't trying to save the market, but rather engineer it to their liking, replacing it with a well-oiled facade?

The more retail flees, the easier their job becomes, as it removes downward pressure (assuming the facade is functional, of course).

Wed, 10/26/2011 - 17:03 | 1814219 apberusdisvet
apberusdisvet's picture

 

PPT to the rescue; the PONZI MUST NOT FAIL;  all the Ukranian hookers and coke dealers would be unemployed (not to mention the owners of all the kiddie porn sites).

Wed, 10/26/2011 - 17:03 | 1814221 mick
mick's picture

Stopped clock - meet my friends ZH and chicken licken.  I know you guys are gonna get along.

Wed, 10/26/2011 - 17:03 | 1814222 Manthong
Manthong's picture

Most folks probably need the dough just to pay bills, local taxes and fees in the Obama Economy.

Wed, 10/26/2011 - 17:08 | 1814235 depression
depression's picture

Hopefully folks are paying down short term debt.

$100 Oil = $4 gas at the pump doesn't help much either.

Wed, 10/26/2011 - 17:03 | 1814223 Caviar Emptor
Caviar Emptor's picture

Oh don't ya worry: all that cash is just "sittin' on the sidelines!" 

And stocks just keep getting cheaper by the minute whether they go up or down!

They should change the name "Risk Assets" I think, to make it absolutely clear that you can get something for nothing and hard work is for chumps. Booya!!

Wed, 10/26/2011 - 17:05 | 1814226 Unprepared
Unprepared's picture

Irrelevant.

Cross-HFT trading will make sure the "market" is quantum locked at target prices.

Wed, 10/26/2011 - 17:17 | 1814238 LouisDega
LouisDega's picture

And the man gets a cigar. You just solved the whos on first whats on second I dont know whos on third mystery. The machines rule the market.

Wed, 10/26/2011 - 17:05 | 1814228 bob_dabolina
bob_dabolina's picture

Sqeeze this

(my balls)

Wed, 10/26/2011 - 17:48 | 1814323 Libertarians fo...
Libertarians for Prosperity's picture

 

 

Give me some tweezers and I'll give it a shot. 

Promise me though, if we can't find them, I can squeeze your wife's.

 

Wed, 10/26/2011 - 17:51 | 1814330 tmosley
tmosley's picture

Hey, look everyone, it's Red Neck Republicant.

Wed, 10/26/2011 - 17:05 | 1814229 spongeBOB
spongeBOB's picture

Who the hell invests in Mutual Funds anyway?  I mean other than people with 401Ks who have no other choice. With all those damn fees you better off manage your portfolio by buying a few index funds ( ETFs).

 

Wed, 10/26/2011 - 17:15 | 1814251 s2man
s2man's picture

I was forunate enough to get a brokerage account in my 401k, so I'm not stuck with those lousy MF's which my company decided are sufficient for my investing needs.

Wed, 10/26/2011 - 17:36 | 1814305 spongeBOB
spongeBOB's picture

That why I rolled my 401K into a brokerage IRA after leaving my job. I was lucky enough to have moved everything into a MM fund while I was deciding what to do, just before the 2008 crash .

Wed, 10/26/2011 - 17:08 | 1814232 Sequitur
Sequitur's picture

Fair comment about dividend payers being in a bubble. I love investing in dividend payers, I'm a horrible short-term trader and in the long run, companies like utilities, energy and healthcare will make money. But companies making money and returning some to shareholders -- they sure have gotten expensive, I've never seen boring utility stocks so expensive. If interest rates rise, look out.

And though I may be a "conservative investor" who likes dividends (maybe that makes me a sucker in this bullshit HFT market), it hasn't stopped me from shorting the fuck out of LNKD and CRM with some big put positions. Gonna short Groupon the day that worthless bitch is unleashed on the market too.

Wed, 10/26/2011 - 17:08 | 1814236 slackrabbit
Wed, 10/26/2011 - 17:14 | 1814249 Mark123
Mark123's picture

Gotta love Cartman

Wed, 10/26/2011 - 17:10 | 1814240 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

April 2010 introduced a strong sell-off to about July-Aug 2010. Then it rallied strongly up to May 2011. Well we have an identical looking scenario now. From May 2011 we saw a sell off down to 1075 in October. Now a rally...does this go to new 2 year highs?. BTFD...its the only game in town. The old adage goes "buy the rumours and sell the fact". The fact that there are no facts ensures a permanently bid market. A perpetual motion machine has been devised. And those outflows?. Ne thinks they will be reversed aroud S&P 1450 (just in time for the impending next sell-off) Wash, rinse, repeat (in perpetual motion)

Wed, 10/26/2011 - 17:12 | 1814245 Mark123
Mark123's picture

Could  you please clarify the bullish take-away from this statistic?

Wed, 10/26/2011 - 17:19 | 1814260 Sigma X
Sigma X's picture

The only bullish take is a sarcastic one. It used to work where redemptions required the mutual funds to liquidate positions to maintain cash levels considering said redemptions. Perhaps I need to refresh my math skills, but it still seems like it should work that way lol.. As far as larger, hedge fund/SWF and algo's driving the market, I have to say it does seem to work that way doesn't it?

Wed, 10/26/2011 - 17:13 | 1814246 danger close here
danger close here's picture

if retail is running away then do tell who these record shorters are responsible for said super short squeeze this site pimped?

Wed, 10/26/2011 - 17:27 | 1814286 topcallingtroll
topcallingtroll's picture

IT looks like 90 percent of zero hedge was short.

We need a bull bear poll and capital allocation averages for zero hedgies. This site could develop its own economic indicators and stock forecasting data.

Wed, 10/26/2011 - 17:58 | 1814347 jcaz
jcaz's picture

"Was"?

Wed, 10/26/2011 - 21:09 | 1815121 topcallingtroll
topcallingtroll's picture

Some still is!

Wed, 10/26/2011 - 17:46 | 1814321 Withdrawn Sanction
Withdrawn Sanction's picture

"...do tell who these record shorters are responsible for said super short squeeze this site pimped?"

People exiting double and triple inverse index ETFs...?

Wed, 10/26/2011 - 18:01 | 1814353 jcaz
jcaz's picture

Nah, that CNBC myth died last week, when someone did some actual MATH, and realized that the actual capitalization of the trick ETF's is a minor percentage of the market.....  Funny, you don't hear the talking heads ranting about leveraged ETF's now....

Wed, 10/26/2011 - 17:20 | 1814262 pitz
pitz's picture

Since 'retail' rarely makes money on the stock market, the market will probably only go up once these retail folks start piling back in.  This is a very bullish sign for the markets.  Screw retail, buybacks put more cash in than the retail ppl can.

Wed, 10/26/2011 - 17:21 | 1814264 kito
kito's picture

everyone is happy!!!-- welfare and SNAP recipients, pm holders, 401k-ers with stock exposure AND treasury exposure, pension funds, farmers, etc......ITS ONE GIANT FRIGGIN PARTY!!! EVERYTHING IS UP UP UP UP!!!! bernanke/obama has figured out a way to keep everybody happy!!!!

Wed, 10/26/2011 - 17:21 | 1814267 Odin
Odin's picture

All of this outflow and yet markets are rallying... Wait, somebody pinch me...

Wed, 10/26/2011 - 18:06 | 1814373 NotApplicable
NotApplicable's picture

You expected something different?

Wed, 10/26/2011 - 17:23 | 1814275 topcallingtroll
topcallingtroll's picture

I found a great income producing annuity product with an inflation adjustment added on as income every few years or so

EWZ.

WHERE U GONNA GET 6.92 PERCENT WITH POTENTIAL INCOME AND CAPITAL GROWTH?

Wed, 10/26/2011 - 17:50 | 1814329 Withdrawn Sanction
Withdrawn Sanction's picture

"WHERE U GONNA GET 6.92 PERCENT WITH POTENTIAL INCOME AND CAPITAL GROWTH?"

In this interest rate market? No where, without taking an s-load of risk....which is exactly what the Bernank wants. His ZIRP is driving normally conservative investors into increasingly risky gambles. So the question is, where's the risk hiding in EWZ (Brazil)? Good luck with it though.

Wed, 10/26/2011 - 20:44 | 1815037 slewie the pi-rat
slewie the pi-rat's picture

hiding?

the central bank just lowered the interest rate 1/2 %...to 12%

so the 6.92% is in dollars, after "real" inflation? 

Wed, 10/26/2011 - 18:04 | 1814364 jcaz
jcaz's picture

Sorry, I need 6.93%.....  You identified yourself as an idiot when you said the word "annuity".....

Annuities- the next black hole of finance.

Are you actually trying to come on this board to pimp some scumbag product?   Wow- desperate much?

Wed, 10/26/2011 - 18:12 | 1814398 DosZap
DosZap's picture

topcallingtroll

WHERE U GONNA GET 6.92 PERCENT WITH POTENTIAL INCOME AND CAPITAL GROWTH?two Questions what are your return rates, and are they insured, and if yes by whom?.

Wed, 10/26/2011 - 17:31 | 1814288 undercover brother
undercover brother's picture

mutual fund outflows,  who cares.  euro zone sovereign debt crisis, who cares.   us banks insolvent, who cares.  collapsing real estate market, whatever!   pile as much shit into the hopper as you want, who cares.    as long as the market goes up, who cares.   bottom line is earnings trends are up relative to hyper low estimates and the federal reserve is priming the money pump.  dollars are being printed in a big way and only the fed's enablers know about it.  There is no other reason for stocks, dollar & euro to be acting like this over the last month.  hyper inflate is on.  in the end, stocks will be at 20k dow, bread will cost $50 a loaf and the US will be absorbed into some fantasy unified world gov't.  soylent green is coming.   

Wed, 10/26/2011 - 17:43 | 1814313 kito
kito's picture

$50 bucks a loaf? i should stock up on some more flour

Wed, 10/26/2011 - 17:32 | 1814293 Balmyone
Balmyone's picture

Third quarter GDP data tomorrow.  Can't wait to see how US GDP is 2.5% when all the data since July has been, with a few exceptions, poor.

I can only say that I'm glad to see silver and gold moving higher. 

http://gainesvillecoins.com

Wed, 10/26/2011 - 17:43 | 1814316 RobotTrader
RobotTrader's picture

Just wait until the flows reverse.

When all that money leaves fixed income.

And starts piling into EFA, EWZ, etc. paying decent dividend yields plus "make my year" appreciation potential.

 

Wed, 10/26/2011 - 18:06 | 1814374 jcaz
jcaz's picture

Don't forget Netflix-  I hear they're gonna start paying like a 12% dividend- tax deferred, with an automatic ramp-up

Shh- don't tell anyone, Robo....

Wed, 10/26/2011 - 17:54 | 1814338 disabledvet
disabledvet's picture

A move higher on massively heavy volume would be nice. My personal view is that what's going on are huge forced liquidations coming out of Europe in order to maintain the facade that "the white knight is on the way." Today it was China which is credible as they're "asshole to elbow" into Europe succeeding. That sounds like two competitors being taken out to me...but i'm just a "poet truck driver" so what do you...er, i mean, i know.

Wed, 10/26/2011 - 18:05 | 1814368 ivars
ivars's picture

Here I have overlaid Nikkei post 1987 and Nasdaq post 1999 charts to see what Nasdaq could look like in 2022. Interestingly, time scales are almost 99% the same almost EXACTLY. ..first time I see it - that could help to explain the reason for time scale stretching when overlaying patterns.

In general, the same deflation->default-> inflation story in a poorly performing economy is visible, but there is a new thing- sudden appreciation of USD after September 2018, which is visible as sharp drop in stock prices.

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&p=34790#p34790

As for current short term stock values , if QE3 does not come and it most likely will not as suggested by Silver, Gold, USDx, EUR/USD charts, posted here  earlier, NASDAQ can find itself near 500 in April 2013, anyway crashing down from latest July 2012.  Enjoy - I will add also Gold prediction chart which most clearly shows QE3 is not coming before Obama is reelected.

http://farm7.static.flickr.com/6232/6284499372_70d6609f5d_o.png

 

By the way, I would be happy if my predictions won't be true- they accumulate into a very nasty ending, and nasty way to the ending- but we can not change human nature- no one has been able to. Greed, envy, fear, fighting, decooperation  determines human behavior under stress.

GOLD 2012-2017:

http://farm7.static.flickr.com/6031/6280083829_2623a36c44_o.png

Wed, 10/26/2011 - 18:36 | 1814500 aaronb17
aaronb17's picture

And what misery to be a retail investor, no?  Look at what happens when they start actually putting money back in the market -- the spikes in inflows are followed by bone-crushing drops, which result in money being pulled out.  It's like the retailers are hiding, and then as soon as they stick their heads out, they get whacked with a sledge hammer . . .  

Wed, 10/26/2011 - 19:36 | 1814741 DosZap
DosZap's picture

topcallingtroll

 

C'mon hep a brutha out......I was serious?.

Potential and real is different,  and how much risk is involved w/ this ann??.( and do you know what, and where it's invested in?), if not, dump it like a $2.00 Ho.

Got a group,been on the radio for years, guaranteeing 20% 1st yrs return, and 100% no risk on your Capital.

Just your returns, if any.

Wed, 10/26/2011 - 21:33 | 1815230 msmith
msmith's picture

Equities are likely headed higher in the days ahead. The USD continues to look bearish in the short term, which should push the ES and SPX higher. The AUDUSD has room to run higher while the USDCAD seems to be headed lower. The USD remains bearish. http://bit.ly/tVwwgw

Wed, 10/26/2011 - 22:51 | 1815632 sellstop
sellstop's picture

So Joe Sixpack has given up on the stock market. Does Joe EVER get it right? No. Does Joe have evough money to make the market move on his own? No. The very large interests buy the majority of stocks. But, maybe they can get Joe to buy those stocks from them in 2 or 3 years....

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