Retail Exodus From Stocks Continues: Another $3.6 Billion Pulled Out Last week

Tyler Durden's picture

There was a time when retail stock outflows were considered a bullish catalyst: after all, retail was always considered the dumb money (not "two and twenty" hedge funds which continue to underperform the stock market, and have done so for the past five years), and would pull money at the bottom and add money at the top. This is no longer the case for the simple reason that while persistent outflows from domestic equity funds continue (and as the recent shuttering of levered ETFs by Direxion shows the infatuation with synthetic mutual fund replacements is now over), for the inverse to be true there have to be inflows, which are now non-existent. In the past two years, or 106 weeks of market data, there here been 17 weeks of inflows, or 16% of the total, amounting to $31 billion. The remainder? Outflows for a total of $300 billion. In the 32 weeks of YTD 2012 money flows, there have been 5 weeks of inflows for a total of $3.6 billion (which was also equal to the outflow in the last week alone) none of which coincided with market tops, and in fact the biggest outflows occurred just as the market hit interim highs. The most recent inflow, as tiny as it may have been, curious occurred during the May lows, proving retail is if anything, the smart money now. In other words, those looking for hints about the market based on retail flows are advised to look elsewhere. What this data does show is that no matter what happens in the stock market, the outflows will persist and are unlikely to reverse direction. Because if the S&P at fresh 2012 (and multi-year) highs is unable to draw retail out of hibernation, nothing will. Where is the money flowing? Why into fixed income of course, proving that as far as the now extinct investor class is concerned, return of capital is the only thing that matters, while HFTs and prop trading desks can fight over all the return on capital scraps provided courtesy of the Chairman. Curious where the volume has gone? Now you know.

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diogeneslaertius's picture

no production, no consumption, and infinity fraud debt

western world gdp non existent

cooincidence theory

camaro68ss's picture

The RATS are jumping ship....

malikai's picture

When retail is gone, we're clear up to 36,000.

zaphod's picture

If retail is selling stocks to buy bonds or MM funds, then the muppets are going to get killed by this trade. 

Hope some muppets are buying real assets in whatever form they prefer.

gckings19's picture

I think retail is the smart money now....they have learned to sell rallies and buy the dips.  the mutual funds and hedge funds are all momentum chasers.......and get whipsawed in these markets.   there are only a very few that really know what they are doing. 

Mr Lennon Hendrix's picture

Or boomers are taking their RMDs (if not more) and buying beamers and benzies to drive to their beach hotel for their long awaited first retirement vacation.  Then they will come back and work on their garden, maybe they will go to home depot and start to work on doing their own remodeling.

This is what matters in life - how cool do you look when you die - because this is how you will be judged in the afterlife; did you die driving a porchse while wearing nikes?  If you didn't, ain't no way you're getting into heaven!

merizobeach's picture

"boomers are taking their RMDs"  Before I ever heard Obama's name, I said that the next president would inherit a perfect storm of economic collapse starting in 2010.  I based my assertion on three primary factors: 30 million or so boomers scheduled to retire in 2010-2015 would dramatically reduce income tax revenues because those workers are relatively high income earners compared to those entering the workforce; the retirees will want to secure their savings, thus removing capital from riskier investments, like stocks, which would crush the market and corporate capitalization, further reducing government tax revenues; and finally the revenue from boomers' income would be replaced by outlays toward their entitlement programs.  All of this, I asserted, would force government into unprecedented debt levels with ever-increasing pace; it then followed that the interest payable on the debt would eat up increasing and unsustainable amounts of the expenditure pie graph.  Actually, I've been asserting all of this since the late '90s, and today, it seems the greatest flaw in my reasoning was only to not anticipate ZIRP; most of those other factors seem to be progressing as was easily foreseeable, although the market is levitating despite the outflows?

malikai's picture

History is very clear when it comes to retail.

The trend is your friend's picture

There are blackjacks being given out at every table and the sheep is still leaving the casino.  I can't wait til institutions start cannibalizing each other.  It'll be fun watching them

" a duke and duke has been here since the exchange was founded, we own it it's ours....get the brokers back in here turn the machines back on turn the machines back on....."

Trading places

mac768's picture

no production, no consumption, the new retailers are now the central banks

this is where the hopium is right now and the algos follow like lemmings until all things fall apart like a house of cards

philipat's picture

Retail is about to get the remaining wealth destroyed in fixed income as rates rise. Most of the retail money is going into fixed income FUNDS wgich mark to market daily. One big scare and everyone wants out and the funds are forced to liquidate at market. The retail investor does not in general understand that fixed income FUNDS are no way to guarantee the return OF capital. Only buying Bonds directly and being prepared to hold until maturity will do that.

hugovanderbubble's picture

To be honest that chart has to be complemented with 




diogeneslaertius's picture

engineer a crisis across the entire globalized framework and then consolidate


why not?

people still cant figure out what happened after waterloo, and now they have their face shoved into some micro-analytical meme on their fake-ass tricorders


id like to think a second renaissance were possible and indeed, inevitable. darkest before the dawn.

dracos_ghost's picture

It's called the Cloward-Pivens strategy:   

A couple of snippets:

The strategy of forcing political change through orchestrated crisis. The "Cloward-Piven Strategy" seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.


Their strategy to create political, financial, and social chaos that would result in revolution blended Alinsky concepts with their more aggressive efforts at bringing about a change in U.S. government. To achieve their revolutionary change, Cloward and Piven sought to use a cadre of aggressive organizers assisted by friendly news media to force a re-distribution of the nation's wealth.

Hmm, I'm not sure but methinks this may be the game afoot.

ZippyBananaPants's picture

Why everyone does not want to get in at the highs is beyond me!

Squid Vicious's picture

they're waiting for the 5 year anniversary of Cramer's "take all your money out of stocks for the next five years..." think that was in early 2009?

HaroldWang's picture

This run will take us close to 1600 area before the big pullback happens. Stay long til then. When companies like AMZN with .01 in earnings is trading at 280 times, you just gotta throw all this out the window and go with the trend for now.

poor fella's picture

Bummer I missed getting 'Chipotle'ed'.

There's still time to get Amazon'ed, Priceline'ed, Salesforce'ed, i(BM)'ed, and Apple'ed.

I only hope to live long enough to see apple-sauce. After watching each Star Wars movie as a kid I was afraid of an accident taking me out and I would miss the end. Then came LOTR, Lost, etc. Whew, MADE IT through those, but this ridiculous move in tech takes the cake.

Tech bubble II? Followed by RE bubble II? and bond bubble II?   <--- are some of these III's IV's Vs?

Interesting - maybe a 'circular ponzi' never ends if everyone's lives depend on it?  Oooo, patent lawyer in the house? Shit, if IBM can patent an outsourcing system and auto-filling out forms for government subsidies..... Maybe I got something? ?

orangedrinkandchips's picture





complete panic.....2.50% to 3% in days?

vast-dom's picture

looking like it could happen....

Headbanger's picture

Then is it just the algos buying on margin here?

vast-dom's picture

one more knight algo fuck up and black swan is ON.


Zero Govt's picture

was Knight a fuck up?

some people made an awful lot of fast cash the other side of those trades, and some people with an awful lot of cash came very fast to the 'rescue'

merizobeach's picture

Great avatar; thanks for the laugh.

_ConanTheLibertarian_'s picture

Bond market bubble bitchez!

vast-dom's picture

when cash is king and inflation is about to smack up the muppets gold will soar and the SP will take a dive and the cops and national guard will conduct many more "exercises" at a city near you.

insanelysane's picture

The US population is aging.  They need to cash out and/or move to safer havens because it is needed for retirement.  

vast-dom's picture

the only safe havens are PM's. unless o.oooo1% at the bank will tide you over against 5% inflation. of course bonds are uh yeah sure....

101 years and counting's picture

a wtihdrawal out of stocks adds to money on the sidelines.  bullish.

Global Hunter's picture

your comment still making me laugh the 5th time I read it

ebworthen's picture

I'd bet the NYT reporting that Jon Corzine and the MF Global/J.P. Morgan Chase crooks will face ZERO criminal charges increases the pace.

I called up TIAA-CREF and cashed out some retirement today, and told the rep. that what made me pick up the phone was hearing that there would be no criminal charges for $1.2 billion of people's money being vaporized.  "I have NO TRUST in any company or the market, and please pass it on".

From his tone of voice and mumbled "I understand" - and he didn't bother to give me the line about how ethical and sound his company was - I could tell I was not the first person calling to cash out in disgust today.

boogerbently's picture

They keep talkng about all the $$$ on the sidelines. People will NOT return to the stock market until they know their money is "safe.

They will not feel their money is safe until the criminals involved in the fraud have been punished.

JPM, LIBOR, Corzine, GS.....

BILLION$$$ of dollar "disappear", and the companies involved pay a $5 million the govt. or lawyers. LOL

Lehman, AIG, MF Global, Peregrine Financial, the latest (trouble) is Knight Capital, and how many before,  and how many to come? They stole all their clients money under the guise of a "bad investment."

It's not a “technology  glitch".

It's not a “trading anomaly”.

It's the new business model.

Say it was "lost", keep the clients money, congress never punishes anyone.

Any charges????

People will wake up when Wells Fargo or B of A do it.

"Sorry....we 'lost' your money!"

Money doesn't get "lost".

If someone "loses" it, someone "makes" it.

That money didn't disappear.

Your bank could do it with your bank acct., Fidelity could do it with your retirement acct., Schwab could do it with your investment acct.....

You'd be broke, they'd be rich, we'd have no recourse, the clowns in Washington would do nothing.

Investor confidence is so low that they are heavily into Treasuries…..???

Treasuries have a negative real yield. A 1 year pays 1/5 of 1%, IF you commit your money for  10 years, you can get 1.6% per year……inflation is at over 2% a year!

That is trusting a government to pay, that has no budget, keeps devaluing its own currency, and keeps increasing its debt.

What’s “safe” about that?


rex-lacrymarum's picture

There is no such thing as 'money on the sidelines'. When someone sells, someone else must buy. The amount of money on the sidelines remains unchanged, all that happens is that stocks and money change ownership. 

So this whole 'money on the sidelines' shtick is something WS invented to pull the wool over the eyers of the rubes. The only important thing w.r.t. money in connection with stocks is the rate of  money supply growth - these additions to the money supply are truly 'on the sidelines' until they are spent. 

John_Coltrane's picture

The Corzine thing isn't surprising but still makes me as upset as anything in recent memory (actually along with Solindra etc).  And the crazy thing is they pretend to not know where the "vaporized" funds are.  They're in accounts at JP Morgue.  Its easy to trace wire and electronic transfers.  Obama and Holder are criminals.  I hope some irate farmer who lost his hegding funds runs Corzine over with a tractor.  Why is this guy sill alive?

Dr. Engali's picture

That 3.6 billion was Robot Trader. He went long treasuries three weeks ago.

amadeusb4's picture

So let me get this straight... outflows produce low volume which results in a meltup? Is that right?

ebworthen's picture

Lower supply = higher demand, even for cow pies

Dr. Engali's picture

That's pretty much it. It's easy to manipulate an illiquid market.

buzzsaw99's picture

an outflow is generally one trade as in gimme my money bitchez. on the other hand active traders got killed over the past few years hence the low volume.

Quinvarius's picture

I am pretty sure the public being herded into selling is still bullish and them buying bonds is confirmation of that bullishness.

I have no economic data to support a reason to buy other than Bernanke is printing a few billion dollars a day and he will probably send the DOW to 36k based on that alone.

buzzsaw99's picture

I agree, they aren't letting the sheep out at decent prices out of the goodness of their hearts. they plan to steal it back with interest from the big pension funds via a rigged market.

Squid Vicious's picture

I think this means more muppet cash on the sidelines... incredibly bullish!

Conman's picture

Yup as soon as volume picks up (muppets piling in at the top), market will drop as wall street unloads onto them. This is what we call "restoring faith in the market" thanks bernanke.

Northeaster's picture

If there are more people like myself, you are spot on, all cash, with a small PM physical holding position.

I don't understand, especially in light of recent court decisions, of how anyone trusts putting their money into the hands of others, knowing you may never get a penny of it back, never mind a return.

tiwimon's picture

"I don't understand, especially in light of recent court decisions, of how anyone trusts putting their money into the hands of others, knowing you may never get a penny of it back, never mind a return."

Complaceny and stupidity are two generalities I have found for those that think they can leave their money on someone else's table - complacent because they think that it will never happen to little ole them, and stupid in trusting that they will be covered if it does

Would you lay a $100 dollar bill with your name on it on a table and walk away and expect it to be there when you return? 

Hell no, now why would you leave it with any of these companies like MF, seriously, you're just asking for it to be taken


aerojet's picture

I have a 401K from a previous company I worked for and they keep sending me these inane mailings trying to get me to sign up for "professional management" of my portfolio.  Right now, it's 100% Stable Value Fund, which in past times might indicate "doesn't know what he's doing" but these days, it is a shyte sight better than letting some Wall Streeter have his grimy hands on my funds and lose it even faster than throwing darts a board would have done. 

Miss Expectations's picture



Savers Flooding Stable Value Funds May Have Limited Access

“Right or wrong, there are plenty of disclosures that participants receive that nothing is guaranteed,” with stable- value funds, said Jon Upham, principal of Irvine, California- based SageView Advisory Group, a consultant to plan sponsors.

“From a practical standpoint, participants think that if they put their money in a money-market fund or a stable-value fund, they think it is guaranteed,” he said.

Everybodys All American's picture

You have to be blind to see this not effectively setting up a collapse without the Fed buying equities in some manner right here.