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"Won't Be Fooled This Week Either": Retail Celebrates Highest Stock Prices Since 2007 With Biggest Redemptions Of 2012
Another week of artificial stock rampage courtesy of a transitory, one-time $2 trillion liquidity spike (that is now ending, if only temporarily), and another week of retail investors refusing to be suckered in (and joining corporate insiders who just sold a record amount of their own stock). In the week ended March 28, domestic equity mutual funds per ICI saw another $3.5 billion in equity redemptions: the biggest since the start of 2012, bring total 2012 YTD outflows to $19 billion, nearly 100% more than the outflow for the comparable period in 2011, which saw "only" $10 billion in outflows. Truly a good way to celebrate the highest artificial stock market high since December 2007. And to all the "but the money is simply going into ETFs" apologists: you are right, with one caveat: Bond ETFs! ... And of course, the TVIX.
And as a reminder, this is what corporate insiders are doing:
So... now that the selling has begun, who among those who have been buying (courtesy of the highest margin debt since last July), i.e., primary dealers and hedge funds, will blink first?
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My pastor says that redemption is a good thing.
Okay junker, you got me. I don't really have a pastor.
Can Tyler or anyone else post a longer term domestic equity mutual funds graph? Speficially, a graph with a date range back to 2007?
Thanks
Fuck you, Bernanke.
You too Geithner..
Remember Kiddies....
NOTHING MATTERS but the reelelction of Chairman Obamakov.
NOTHING....
A whole lot of folks know there is NOTHING underpinning these markets but printed gubment money. But as long as The Magic Sqwauking Box in the living room tells the sheeple everything is fine, they will just stand in line to be fleeced.
It does not matter if Romney or Obama wins...Goldmanites will still run everything.
Nothing matters but keeping the curtain closed and having people believe theIr election makes a difference.
NOTHING
Dupe
Exit stage left. (also front, right, and center)
Also explains the increase in retail sales and the simultaneous drop in the savings rate. Many people - especially retirees - are liquidating assets in order to be able to buy increasingly expensive items like food, gas and health nsurance.
I suppose it eventually ends when the Primary Dealers own 100% of the equity market and then hand it off to the Fed as repo collateral.
Honestly, you'd have to be an idiot to try and "save" dollars. I clean out my 401 every chance I get and invest it in my future directly.
That is EXACTLY what is going on. I've posted it on a few message boards, but just started posting here. The data we've seen is actually internally consistent if one thinks it through. The bottom line is that stock outflows will not only continue but accelerate. "Retirees" and "voluntarily" unemployed will sell stocks and buy hi grade bonds and 20% gold as a hyperinflation hedge. A balanced portfolio without a WS tax and easily controlled and managed by the individual...
"The bottom line is that stock outflows will not only continue but accelerate. "Retirees" and "voluntarily" unemployed will sell stocks and buy hi grade bonds and 20% gold as a hyperinflation hedge."
No BS, I've been thinking of doing this in my retirement account for a long time. Interest rates will eventually rise though. If interest rates rise the bond prices get crushed and gold will likely go down. That is the downfall to the plan. I have heard that interest rates can't rise, because the country would go insolvent. It's tough to know what's going to happen over the short term.
Talk about trying to catch knives, scoop nickels in front of a steamroller, etc. I'm only "allowed" access to my 401k if I leave my employment. I'd have to quit, wait 60 days or something, and then be given a check minus the government's slice, all while hoping the shit isn't already plastered all over the walls.
Good thing I'm counting that money as a big fat 0 at this point and have actually made preparations. Others I talk to are in for a pretty rude shock. I'd keep warning them but I'm sick of being scoffed at.
The short-term in this sense is largely irrelevant. Self-sufficiency to as large of a degree as possible is your long-term goal. Nothing else matters. What good is a thousand ounces if you can't defend them and yourself? Or trap and hunt game? Or purify water? Or grow a single tomato plant? Or cultivate land? Or...?
You are sooooo right, Chump...some people just don't want to see the writing on the wall. Paradigm shift of the first order coming round the bend...then BAM! It's here, so deal with it...and all those folks will be saying -I can't believe it/How could this happen/It's like a bad dream/It"ll get better...It has to -but it won't, not for a long, long time, if ever -probably never.
My take also, the PTB have this factored in.
I think Greenscam also alluded to it, that is that retirees just want the money they don't really care about what the market is doing or where the money is coming from.
Now with new "Plunge protection technology" The PTB can keep the retirees happy while at the same time ending up as the proud owners of every listed company, and all they have to do is flick a switch and let their ALGOS do the work.
Additionally of course they have to meet all the stringent regulatory requirements that exist to " Protect the investor of course".
Have fun playing in the Casino kiddies....
Bullish... again. Jeez, this site has gone permabull. They should change the name to bullishhedge or something.
LOL WUT?
What do you consider bullish about this article? It's nothing more than documenting the race for the exits. As for the Bond ETF, I wouldn't say it's bullish, but a defensive move by money caught inside of the system with no meaningful alternative.
Hansel is so hot right now. And, I believe, sarcastic.
Could the message be:
http://www.youtube.com/watch?v=Rp6-wG5LLqE
?
Insider flactulance is a good sign the market is about to take a dump.
http://www.reuters.com/article/2012/04/04/us-yahoo-layoff-idUSBRE8330LY2...
"(Reuters) - Yahoo Inc will lay off 2,000 people, or 14 percent of its workforce, in its deepest round of job cuts in years as new Chief Executive Scott Thompson...."
Seasonally adjusted to 12.
I would like to nominate this for the comment of the day.
Thanks Laws. Humbled.
What's a Yahoo? Some crazy old hick?
watch the "bounce" tomorrow...and the SELLING (within), while it lasts!!
Masters starts tomorrow and Friday is a holiday. Watch the volume evaporate.
Yep that's correct! Low volume....ergo "bounce"!
Covered my shorts, long some gold and Russell2K.. Gold hurts...
No volume= ramp up. And in the interest of full disclosure, I am at the Master;s cracking a cold one now. Will be MIA until tuesday.
Early crops are in, Mother Nature can take care of things for a bit. Next round of planting begins on the 15th.
I cashed out of most of my positions today also. Except a few small positions that I cannot sell right now. But, my trading account is flat as of today. Do not trust the pre Easter and Post Easter ramp.
Feels good to be flat with the cash on the sidlines. This way I can enjoy the Holiday without worrying about my positions.
Perfect. Hopefully, retail will keep pulling money. Personally, I don't think retail has as much choice as others do. I think the connection is all of those "voluntarily" dropping out of the labor force with early retirement... They have more assets (and stocks) than others and find themselves in a dramatically more precarious position. As such, they are doing the wise thing and raising cash.
All the talking heads keep saying money is going to come off the sidelines. They aren't reading the situation or the demographics correctly. Nope. Money will be flowing out of the market from this point forward. People like my parents (in their late 70's with significant but not overwhleming wealth) simply don't trust the market and are going to cash, gold and hi grade corporate bonds. That's who holds the nation's wealth and that is the trend that will dominate the next decade. Long stocks is a classic muppet call...
Timeline:
After this realization (and increasing money pressures on familes due to $4.50-$5.50 gas):
- DOW falls to 12,000 by August, especially after US Debt gets downgraded (again).
- Fed kicks in, and introduces their latest round of QE, name it "Operation Pony".
- DOW rebounds to 13-14.5K by October.
- Due to the printing, reality sets in for Bonds, but not until Jan 2013 (it *is* rigged, after all).
- China announces further decoupling from dollar by selling bonds back to Fed, as well as continue their trading program with Russia/Brazil/Etc.
- President Obama/Romney announces cuts, especially for those on Medicaid/SS but mostly for slashed program cuts (college loans/UE/Welfare) to mostly Millenials (as we are the sacrifical lamb).
- Shit hits fan, cue popcorn and lulz
Easter spending....chocolate bunnies, eggs, coloring, ...stuff like that.
Traditional analysis would say that information is scary bad for Bonds,especially with them at all time highs. Paging Mr Bill Gross. You are long Bonds out your rear along with Joe Sixpack!
Tyler, you and the ZH crew can take credit for a lot of retails' sceptism and wariness. Thank you.
Can Tyler or anyone else post a longer term domestic equity mutual funds graph? Speficially, a graph with a date range back to 2007?
Thanks
You Da Man.
When the herd is going to bonds that tells me that it's probably going to blow up soon. So if stock suck and bonds suck whatever shall I do? Hmmmmm precious metals look pretty damn good right about now.
Land sounds like a good deal. Unforturnately land has a large position size.
It would be really nice if .gov looked at the situation (equities at nosebleed and houses at dirtnap) and said you know, we will allow, say up to 250K to be pulled from retirement accounts (401k etc) without penalty if it is being used to buy a home. IDK, just a thought. Have not considered the ramifications, just off the top of my head it seems like a good idea.
Obviously the street would be apalled, so maybe FED balance sheet expansion to balance things out if this was hugely succesful would be warranted. Any thoughts?
.gov shouldn't do anything but stay out and let these markets find fair value.
What is the downside if they allowed people to buy homes with their retirement money without the early withdrawal penalty? I agree wholeheartedly with your comment, but that time has past. The decision has already been made. They are stuck providing the IV drip (as they are currently) or they crash the economy again by opening the floodgates. The wall st. lobby is what will prevent people from cashing out of paper and getting tangible (roof over their head). It is the right thing to do. Why not?
The floodgates open and Meredith Whitney will be proven correct as municipal tax revenue collapses and another solid wave of defaults occurs. Recovery is in full swing here in FL. The central planning solution has been implemented for too long already. It is not as though there is only one possible solution, we are resilient productive people and whatever path is chosen we will move on at some point.
If one could take say 150k out of 401k and buy home cash, they will be better off. If they need the $ at retirement then the reverse mortgage industry would boom I guess.
The downside is that they'd be involved in markets. But if you mean economic downside, it seems like a zero sum game to me. If they deflate stocks to inflate housing, then they have to explain a collapsed stock market. Stocks are more directly related to jobs than housing. Housing is a by-product of a lively job market.
Precious metals have always looked good baby....keep stacking Doctor.
#wealth effect fail.
Fed & wall St. can't outspin the discussion going on in social media, blogs, and crowd knowledge.
Instituitional Investors are dumb money now.
But Tyler - you said that back at 1000 on the S&P as well! You missed the entire rally and now you are gloating?
While I like a lot of ZH analysis and for pointing out risks on the horizon, as a trading guide - Tyler has been right twice a month (at least in last 6 months).
I tried going short when Tyler said "The Europeans are selling to you" and a even tried this year - lost money mostly. Current trend is Chop - they stop out the Bulls on the downside (for those who use stops) and stop out the bears on the upside before turning back around.
haha what do you mean make money on the way up?? This is a doom and gloom site dont be silly. Reading about the sky about to fall is the main reason people are here. The only commodity that should and will go up in "value" is GOLD&Silver!!Anything else is just "paper money" with no real value. Who cares if paper is convertible to precious metal. The market is nothing but a gambling pit for algos gone crazy. The only way anyone else pulls money out of these markets is via luck or insider trading ;)
P.S Its ok Tyler, you've missed the ENTIRE RALLY in the S&P as your too blind to see the forest from the trees.
Rough day. Tomorrow should be interesting.
Something tells me Merryll Lynch will the 4th primary dealer to go. Weakest link IMO.
By Sandra Block USA TODAY
While millions of workers used money from their retirement savings to pay expenses during the Great Recession, African Americans and His-panics dipped into their 401(k) plans at a much higher rate. The rise in 401(k) withdrawals, loans and cash-outs among African Americans and Hispanics represents a major setback for their long-term retirement security, says Mellody Hobson, president of Ariel Investments, co-sponsor of a survey on the recession’s impact on retirement plans. Even before the recession, African Americans and Hispanics had lower average balances in their 401(k) plans than whites and Asians. Among the survey’s findings: uNearly 9% of African Americans took hardship withdrawals from their 401(k) plans in 2010, vs. 6.3% in 2007. By comparison, 1.7% of white workers took a hardship withdrawal in 2010, vs. 1.1% in 2007. uHalf of African Americans and 40% of Hispanic workers carried a 401(k) loan balance at the end of 2010, vs. 26% of whites and 22% of Asians. Although 401(k) loans are popular with employees, they are risky during a recession . When borrowers are laid off, or quit their jobs, they’re usually required to pay off the entire balance, usually within 60 days. The majority of workers who leave their employers with a 401(k) loan outstanding are unable to fulfill that requirement and default on their loans. The default rate is even higher for minorities: 80% of African Americans who leave their employers with a 401(k) loan outstanding default, vs. 76% of Hispanics and 71% of whites, the study says. uTwo-thirds of African Americans and 57% of Hispanics who left their jobs in 2010 cashed out their 401(k) plan balances, vs. 39% of white employees and 34% of Asians. When workers cash out a 401(k) plan, they usually have to pay taxes on the balance, plus a 10% early-withdrawal penalty if they are younger than 59½. The higher rate of 401(k) loans, withdrawals and cash-outs reflects the disproportionate impact of the recession on minorities, says Pam Hess, director of retirement research for Aon Hewitt, which co-sponsored the survey. In 2010, the unemployment rate was 16% for African Americans and 12.5% for Hispanics, vs. 8.7% for whites, according to the Census. Still, cash-strapped workers should view their 401(k) plans as a last resort, Hobson says. “Without serious attention and significant aggressiveness in savings, I don’t know how you get back on track,” she says.Thank god for Social security.. Oh Wait!
"World Ends- Blacks and Women Hardest Hit"
Really funny that Retail is leaving Wall Street as the Bag Holder this time. Priceless.
Most 401Ks at least don't allow ETFs yet. So whoever is going into the ETFs is not the 401K investor.
Warren Buffett and his 1800 SPX swaps are toast. Burn, you old dirty old bastard, burn.
Look at the idiot article from usa today claiming that 401k redemptions are a bad thing.
I'm not going to defend the sheeple pulling out money so they can pay for an ipad. Still, it makes sense to have your money now, when you need it, rather than later, when the money won't be there or will be inflated away.
The biggest suckers of them all, by far, are all those working people, white or otherwise, who still pour money into their 401ks, where it disappears down a black hole of fees and empty, broken promises of "growth." They will be utterly screwed. Deservedly so? Well I'll hold judgment on that.
Let me tell you...either something is yours NOW to do what you want with it, or it's not yours at all. 401ks, pensions, retirement plans, they very well might be the biggest scam in the long history of scams.
Get yourself some cash, a basic bank account, and lots and lots of metal, and hold on tight.
Psychological/emotional market rally. People don't want to miss out on the run, so they're still bidding up prices. When earnings come out they're going to be brought back to reality/rationalism.
I must have missed the rally you are talking about. I'm red today.
"People don't want to miss out on the run, so they're still bidding up prices. When earnings come out they're going to be brought back to reality/rationalism."
In other words:
"when a good time turns around
you must whip it
you will never live it down
unless you whip it
no one gets away
until they whip it"
Rock stars. Is there anything they don't know?
The only problem I have with this post is "retail investors refusing to be sucked in".
When has this ever happened? That's what retail investors do ... get sucked in (and spit out at the lows).
So, if retail is indeed balking, what does this say? That retail suddenly wised up?
C'mon ...
How many times do you need to put your hand on a hot stove before you learn not to do it again?
Naz Crash of 2000, 9-11-2001 Crash, 2008 Crash, Flash Crash. Plus, how much Money do they have left now to "Invest".