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Retail Investors Pull $132 Billion From Domestic Equity Funds In 2011, 33 Of 34 Sequential Weeks Of Outflows
Yesterday, before today's latest ICI release of the weekly mutual fund flow report, we predicted that "Tomorrow ICI will reaffirm the retail investor boycott of stocks with the 33rd out of 34 equity fund outflows." Sure enough, the report came and, as expected retail investors have pulled money from domestic (and foreign) equity funds for 33 of the past 34 weeks, with last week another $4 billion getting redeemed as mutual funds, now unchanged for the year, somehow have to deal with a $133 billion lower cash balance than at the beginning of the year. Because if anyone thought last year was bad with the flash crash and all, the $98 billion that was pulled in all of 2010 is a pale imitation of what 2011 is setting up to be. And this year we didn't even need a 1000 point DJIA drop.
As for where the money is going, why straight to Gresham's finest: taxable fixed income, with another $4.7 billion in cash entering the fixed income arena and departing equities, probably for ever. Our advice to the Chairsatan - if he truly wishes to get savers to push their money out bonds and back into stocks, he may very well want to consider some very traumatic event in fixed income: a flash crash for bonds if you will. Because at this rate mutual funds will i) have no cash left very soon (as a reminder here is what cash balances at mutual funds look like), and ii) will be forced to start selling assets to satisfy redemptions. And as John Paulson will gladly attest, ii) never leads to anything but a toxic spiral of selling begetting more deleveraging and selling. In retrospect, knowing the Fed's bull in a china store approach to generating crises, forget we said anything and just keep on pretending that manipulating the bond curve will eventually, finally, some day get people to stop buying bonds and back into stocks... Or not.
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HFT's trading with each other. Nice market. Wake me up when it's over.
HFT loves to trade on the same prices over and over in a circular fashion http://hedge.ly/sXg4Lx
I just have one question, HFT trades same prices over and over. With all the supply being added.
When do prices go down? I always thought more demand, higher prices. Less demand, lower prices. Eh?
Alphachat: Sal Arnuk on high frequency trading
http://ftalphaville.ft.com/blog/2011/12/19/797701/alphachat-sal-arnuk-on...
audio link: http://podcast.ft.com/index.php?pid=1354
@SHEEPFUKKER
Fuck the HFT game, fuck stocks, fuck bonds, actually fuck all paper. It will be stolen either through outright theft, MFG case in point, or through inflation, central bank printing case in point. This is not a market, it is a casino in an insane asylum, and the inmates are running it.
It's like, one day you wake up and reallize that you are a slave.
If you look hard you can find some decent companies, some in emerging markets who have some solid yielding bonds going out 4-8 years. If you buy the premise that it's a slow bleed out from here and not a bang up crash those bonds plus some metals to offset rampant inflation is probably better off than the spy. For whatever it's worth. Just my .02
solid yielding bonds going out 4-8 years.
Bonds both "solid" and "yielding" that far out? Aren't you concerned i-rates will take a kangaroo leap up in that time horizon, crushing bonds? Just want to understand your logic....
Hey mayham first off like I said if you own the metals to go along with them you could conceivably try to prepare for either scenario. But you have to own the metals. Admittadly I am 3 black labels in the hole and bored and don't actually even believe what I wrote 100%, So if you really hammer me on it I would concede I agree with you. I just think it's better than going to cash.
I wasn't trying to hammer...just curious as I take everyone's perspective as useful. But now I'm envious of the black-label trifecta. Wash it down with an icy Grolsch and you'll feel nice. :)
Alright since you are reasonable let me ask you...You could probably grab a company like Telefonica...go out to 2019 and get over 6%. If you were 65 years old (which I am not), needed income and looking for something conservative and own some div paying stocks as well as some gold... Is it that bad of an idea to own something like that? Can you guarantee that person the inflation argument? Just curious.
I heard black label came out with a double black label or something like that. Have you tried it yet? I want to give it a shot.
Two-subject conversation - excellent! (Just don't expect that we'll be takin' long hot showers together anytime soon).
I'm a risk guy, so I never make guarantees. As to the inflation argument, the mathematics are pretty well set that staple items will inflate dramatically as the bazillion clownbux takes hold. Just a matter of how long the bankster complex can forestall that death knell. I think the probability on that looks like the Greek bond yield curve.
My view is that the best way to protect against inflation is to buy and store those things that one will need. That takes the price movement out of the equation. Otherwise, it's a crap shoot as all returns are relative to the buying power of the currency in which they are denominated.
I've never heard of double black label. Double secret probation, yes, but not double black label. Happy hunting.
fair enough on the first point.
Here you go on the 2nd.
http://www.mutineermagazine.com/blog/2011/10/johnnie-walker-launches-new-limited-edition-whisky-in-the-united-states/
I think my wife got me that for Christmas. I don't have any Johnny in my cabinet and pointed this out to her the other day. I'm so excited.
Since 1981 thirty year usa treasurys have had the best return of any asset class. 11.5 % annual return if I remember correctly.
If we continue to slowly deflate in the west and emerging markets continue to show decreasing inflation it is conceivable that emerging market bonds sovereign and corporate may outclass all other assets the next five to ten years.
Thirty year treasurys? What a contrarian play. Do you know anyone who has been bullish on the long bond these last few years, much less the last thirty.
Most bull markets make it to the top with the fewest participants. Gold cant be the asset class that outshines everything because there is too much positive attention from goldman sachs, etc.
I cant find anyone who thinks deflationary trends will continue, nor anyone who has a good thing to say about emerging market debt.
I thought I just had a good thing to say about emerging market debt?
Shanghai index is hitting new lows.
http://www.google.com/finance?q=SHA:000001
I'd stay away from emerging market bonds. There may be a wave of downgrades in China in Q1 2012, if the property market continues to collapse.
You're correct on the treasury returns. Some would argue that treasurys are the last (and most stealthy) bubble of them all. Not sure I agree that slow deflation is likely or even plausible. Sovereign debt defaults - actual or defacto printovers - are apt to be pretty lumpy in my view. But I appreciate your stream of thought.
Interesting that you think of gold as an asset class. I think of it as a wealth store and the currency by which to measure other assets' performance. The world looks different when you price things in gold rather than dollars or yen or Euros.
Last, if you can't find anyone who thinks deflationary trends will continue, just toss that thought out a few times and I'm sure you'll find a few.
@top - How will Gold's value (even, price) be determined by 'positive attention from goldman sachs'? Paper? Maybe. Physical? Not so much. GS's positive attention is boundless, physical is not.
How can treasuries possibly continue a bull market after thirty years? Yields are next to nothing. Even if they remain stable, they are no longer a bull market.
As for emerging bonds, sure, invest as long as you are confident the markets and the brokerages will still be in operation. Yesterday Lehman brothers, today MF global, tomorrow Vanguard and Etrade. Then capital controls.
Basically one still needs a bunch of cash. It sucks but it's the way it is, cash is the only thing you can directly convert into stuff you need. Even if the crack up boom occurs, it will impact everybody, so you won't be alone.
1/3 cash, 1/3 metals, 1/3 survival goods.
Lack of flowing credit (heroin) being replaced by "savings" drawdowns (methadone).
how do mutual funds stay in business? there must be massive job loss in process at the banks and financial institutions
It just means even lighter volume and, therefore, even easier to ramrod higher at-will.
I heard Jim Cramer is looking for employment. Was last seen scouting a corner in NY for a gyros stand.
What does it matter if they ramp it higher? If you're lucky and hold the right stock, you might see 1% or 2% appreciation next year. BIG FAT MAYBE on that one! Most likely outcome for 12/2012 is a market 5% below today.
If you're a lucky insider and get advance intel, you may get the call to buy a certain stock that's almost guaranteed to go higher because company is about to announce something major.
The reality is the last retail investor idiot standing will have to turn off the lights.
The Lord ^Obama^ Is A Monkey.
As soon as he opens Mexico, they will need to sign his voting ballet. Interviewing questions prepared by DHS.
ICE: Bienvenidos a los Estados Unidos de América.
Nuevos Inmigrantes: Gracias Gringo.
ICE: Te das cuenta Obama es responsable de ofrecer a las nuevas libertades?
Nuevos Inmigrantes: Sí, señor, estamos muy agradecidos.
ICE: Tenemos una elección el año que viene, por favor firme la tarjeta de Obama de votación. Si no, no podemos permitir el paso más.
Nueva Inmigrantes: No hay problema señor. Dónde hay que firmar?
Eric Holder will look like a genius.The new taxable alien revenue will help the ponzi system keep thumping along.
/sarc
This morning I posted that I believe that 2011 was the truning point where the American public lost faith and interest in the stock market. I stand by that. As after other huge historical bubbles in the past. After 1929-33 it took 20years for the interest to return. After 1973-5 it took 10 years. And this time who knows. Because I beleive that 'this time can be different' it is unknowable. And for the simple reason that there's no telling what the world will look like in a decade or two.
Who cares about the stock market. It's over dude. America probably ended in Nov 2008.
THIS, is the kind of "fundamentals", that matters for the big picture.
"the market" == banks and govs.
No one with any sanity, or geniuses, are left in what popularily is called "the market"... keep that in mind, the next time you get delivered your daily dose of "but if you don't do what we say, 'the markets' will go down".
It's not about you. It's not even about who employs you. And it damn certainly isn't about "the economy".... its about the ponzi, attempting to hold you and the rest of the planet hostage.
The Fed took a critical, fateful decision in March 2009: reflate the stock market for the good of the insolvent banks foremost, and as a secondary goal to reflate damaged retail investor retirement accounts (401Ks). It was fateful because it accomplished neither goal and provoked a number of unintended consequences. It didn't save the banks because incomes generated from trading cheap Fed money amongst themselves through HFT is a zero sum game. Without gobs of dumb money, there was no real return on the investment. And hence the banks now 3 years later are still in critical zombiefied condition, totally dependent on the state for life support and begging for more QE despite the toxic effects on the economy. For retirement portfolios, most retail investors did what the dumb money usually does: got out at the bottom with heavy losses. The 2010 flash crash didn't help confidence getting back in, nor did the crazy volatility and low volumes generated by HFT. But most of all they never trusted Wall Street after the two stock market crashes after 2000.
And then a funny thing happened: the economy sucked. The jobs lost never returned and a killer side-effect of Fed policy set in: Biflation. They succeeded in reflating the cost of living and doing business, and what I call the paper economy (shadow banking, derivatives) but not the real economy. Another side effect was to further encourage offshoring of jobs and whole industries by US multinationals. And so it was a cinch that retail money instead of coming back into stocks got used to pay high expenses, underwater mortgages, and for the millions of un/underemployed it was survival money. As they further pursued their policy the market rose, and the real economy got further eroded especially in the area of dropping real median incomes and family net worth. And the final blow was austerity which directly impacts retirement assets: if Congress cuts Medicare and Social Security then people will be extra cautious with whatever they still have and won't gamble and risk losing all or most.
Prognosis: poor. Given the political and economic realities that the global and US economy now face there will be no interest in stocks on the part of retail investors. And the numbers show it in spades. Money is going into other conservative investments, but a huge chunk is simply being drawn down to cover the Biflationary gap (cost of living - declining real median incomes)
Spot on, CE. And the forces are in place for 'biflation' to continue. The drawdown of retail investment drastically slows the economy's ability to invest in productive assets; meanwhile, those "proceeds" in part are used in desperation by strapped folks to chase staple items, supporting the inflationary pressure. It's an absolute death spiral - deflation of false value stores makes folks poorer, while the economic conditions force them to draw down whatever residual value is still there just for sustenance.
I'm more wary of intensified rioting than of some spectacular "market crash."
Agree. Social consequences will become more real and apparent in 2012. It's started already. But as political will fades for keeping social programs and unemployment extensions we're going to have masses of real poverty. All because of the refusal to allow the grand reset that the economy needs. Friedman and all his disciples (like Bernanke) thought they "learned the lesson" of the Great Depression : how to avoid paying the price of a mega bubble. They didn't learn a thing. The reason the country came up fighting after the Depression (with double digit GDP growth years) was simple: bankruptcies, defaults on unsustainable debt, reorganizations, and adjustment. Aka creative destruction which like a forest fire ultimately purges the rot and the walking dead, and makes room for new enterprise with real competition. Instead the Fed and the politicians chose to keep the rot this time. A fateful decision that will be discussed by historians for a long, long time. It is a tremendously costly mistake.
Anyone reading about this Alan Stanford Ponzi scheme guy? Look at him at his day of reckoning. He is a total vagina pussy. Thats a clinical term by the way. These are the guys running the show. Look at them when they get brought down. They look like a caught fish flopping for air on the deck of a boat. Deperate and pathetic. They would rather take everyone down than admit what they did. This is our leadership.
Many people know the families, media is tight lipped. When they're surgically removed (barber chair) or something like the loss of their children, they will refuse to back down. Back in the day, Teflon Don thought he was GOD. In today's world, gun sales are at a all time high. I can predict the ending of the 2012 movie.
Before I was born..
Murder Inc. 1960
Jim Cramer, Jon Corzine, Angelo Mozillo, Timmy Geitner ............
The sheeple are waking up!
One must always consider the possibility that this is a contrarian indicator. My feeling is similar to yours though.
For most people, you can't buy food/fuel and stocks at the same time. Game over for stocks.
Hope and Change with the islamic.
At this point, i normally should write a good counter-argument to your post, or extend it with follow-up arguments.
But honestly, i see no point in that in this case.
Plain and simply: Full agreement.
And as for the "biflation", yep... my direct environemnt, as well as apparently that of my international friends, is mainly sucked up by it. They just try to make ends meet, with pretty much no reserves for "aggression".
At least for those not invited into the upper class, or very clever individuals, the strategy right now isn't expansion, but at best fighting for keeping what one already achieved.
Easy credit by Central Banks has created bad money (HFT & Hedge fund) pools that have pushed out good money (long term investing retails)
There will be a flash crash in equities Q1 2012. calling it here.
"Flash Crash" implies that market would rebound immediately.
Don't count on it!
Hate to say it, but this maket is going higher. All this bad news and it just won't go down.
But But But what about the Bollinger bands. Those fucking bollinger bands. Lets not forget that Hindenburg omen thingy.
When you say "higher," do you mean higher than the negative nominal return the S&P 500 has posted in 2011?
Higher as in "high on hopium"
Markets going higher my ass. CB is keeping a floor under prices so we don't see a total collapse but there's no fresh money coming into the market either. Banks, brokerages, CBs on the other hand are still deleveraging and selling to anyone who's dumb enough to buy.
Fed is not announcing any direct injections, so why buy this market? To own a piece of corporate America? Is that cool or something? Just as it was cool to own a piece of real estate?
Equities are a depreciating asset. I'm using the term "asset" VERY LIGHTLY!
The markets will go "up" 10% while the worthless fiat currency will lose 30%. You are on the way to being another rich Democrat like that liar Buffett and Corzine.
Me? I can't lie well enough and I guess that's why I'm not rich!
It won't go down for as long as you and your family keep a runing taxpayer tab at the Fed, because they're shoveling your money at it on credit. Whenever that stops it's bye-bye market as the banks fold up the tent. Can you say vicious cycle?
as one of ourz mentioned yesterday, a stopped clock is right twice a day, a broken clock may never be right...
but, since this is yer first post: welcome to zeroHedge, shithead!
I mean higher as in big market breakout. Simple reasons for this.
1) The wrong trade is the right trade now.
2) HFT rigged market.
3) More FED munipultaion.
4) Election year
5) Too much short interest.
This market should of imploded already, forget about trading what you think. Trade what you see.
You forgot to take into account reality.
Granted, in this rigged excuse for a "market" one may be inclined to take an absolutist contrarian stance.
Won't happen this way. What you will get, is an inconsequent convoluted compromise, of fake and reality... and unfortunatellly, for now the fake-aspect cannot keep up with reality.
That is not to say that it won't happen. Actually, personally i think that it will happen.... and it will be the last thing ever, that will work according to the current doctrine, because after it's failure, it will be quickly replaced with outright "i say so, so it is so".... which in turn will be quickly met with a lot of anger....
Short version: I think the situation is fucked. I think no matter what they do, the consequences will be "fucked".... the only question left, is who has the bigget penis (hey, with me already being sarcastic, i can afford ridiculing not only the estanlishment, but the big picture incluing "the resistance").
Market predictions? Well, in short - from a hypothetical POV, maximum unpredictability and uncertainity. It doesn't matter if you get a little QE3 in-between... the overall situation simply is fucked, one way or another, and the question is just how it will shaped.... which not just depends on the will of the ponzi. Prepare for chaos... that is, prepare for what YOU actually need.
Reality!!!!!
There is no reality to this market. There is no logic to this market. People keep quoting support and resistance levels like they mean something. Look at every chart, and watch HFT in action. They blow through them on both sides then reverse. We end up back in the middle of the range over and over again.
They will keep printing money and hiding it, Keep lying on Major news networks on all economic data. The average person believes it and trusts it. Most people are too clueless and just want to post what they ate for dinner on facebook.Sad, but true.
I see I have been greeted properly. Now I feel loved :)
BIG MONEY is coming into the market! BIG MONEY!!!!
Can't remember who but one of the business "news" anchorette bimbos said as much on Monday on CNBC.
If all markets are a crap shoot, the players stay out. Sell now with a loss or eat higher losses later. There's no "come back" to the market, no turnaround. S&P failed at 1256 earlier this month and can't even hold 1241 now.
Double Black label has piqued my interest. Now I'll need to hunt some down. Cheers !
I don't think there's much wrong with that actually.
Retail is always late to the game. Say indexes rise another 20-30 percent, while unlikely in the short-term, but with all the hot money and some index redefinitions not impossible, it will rise on small volume as only more savy investors pile in, then retail will be thinking "The market is going up, I must buy buy buy!". Market is up 20 %, flow of funds reverses. Intellignet investors exit.
We all still got a long way to go -- Faster boys. Get it all out of the banks now before it goes MFGlobal.
132 billion? Is that all? Pfft, Benny can create that in a split second!
SAVING MONEY IS NOT WHAT MADE AMERICA GREAT!!!
it was because they bomb the shit out of every eastern and Azian country 10 times over.