TrimTabs reports Fund Flow Records Smashed Across the Board in 2013.
TrimTabs Investment Research reported today that U.S.-listed equity mutual funds and exchange-traded funds took in a record $352 billion in 2013, smashing the previous record inflow of $324 billion in 2000. Meanwhile, U.S.-listed bond mutual funds and exchange-traded funds redeemed a record $86 billion, topping the previous record outflow of $62 billion in 1994.
“The Fed finally succeeded last year in its long-running campaign to coax fund investors to speculate,” said David Santschi, Chief Executive Officer of TrimTabs. “The ‘great rotation’ that some market strategists long anticipated is under way.”
In a note to clients, TrimTabs explained that U.S. equity mutual funds and exchange-traded funds received $156 billion in 2013, the first inflow since 2007 and the biggest inflow since the record inflow of $274 billion in 2000. Global equity mutual funds and exchange-traded funds received $195 billion, edging past the previous record inflow of $183 billion in 2006.
There you have it. If you have been wondering what is causing this massive rally in the stock market, wonder no more. The stocks are “Melting Up” because everyone is “Panicking Into Stocks” and exactly at the wrong time.
Please note that the funds inflow smashed the 2000 record by about $28 Billion. While not significantly higher, it confirms what we have been talking about here. Primarily, the psychological factors behind the run up. People/funds are taking money out of Bond Funds and rolling them into Stock Funds at record numbers.
What’s wrong with that?
Technically nothing. People are free to do as they wish. Yet, from a historical perspective, this tends to happen late in the bull market. During the so called Blow Off Phase or the last phase of the run up. As I have mentioned many times before, today’s market feels exactly that way. Massive speculation, psychology of the crowd pushing everyone to be in the stock market, overpriced assets, weak underlying economic base and fundamentals that are driven by nothing more than a crazy expansion of credit by the FED. That’s just a few of the reasons.
The bottom line is this. The bear market is about to start. My mathematical work clearly confirms that. Be very careful going forward and think about getting out of stocks completely once the market confirms the reversal.
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Warning: Mutual Fund Inflows Are At Pre 2000 Collapse Levels. Same Outcome?