Comments on: MUTUAL FUND FLOWS SUPPORT A BULLISH THESIS

By: percolator

percolator — Thu, 04 Feb 2010 23:07:09 +0000

Does this data take into account money flows into ETF’s?

I thought I read somewhere, though I can’t find it now doing a quick google search, that while money has been flowing out of equity mutual funds, money has been flowing into equity etf’s.

By: TPC

TPC — Thu, 04 Feb 2010 20:13:31 +0000

It’s a very real concern. I can’t tell you how many people I know who lost money in the tech bubble and then were fooled into coming back to the equity market in 2006/7 only to be fooled again. You know how the old saying goes: fool me once shame on you….Those investors will not be fooled a third time….

By: paul

paul — Thu, 04 Feb 2010 20:07:55 +0000

Blurb from Trader’s Narrative blog:

“It is very unusual for investors to ignore a rising market. But it is an understandable reaction after having been burned so many times within a decade. The last time we saw such “scarring” in the psyche of investors was in the aftermath of the 1970’s bear market. Then, as now, US retail investors left equity mutual funds in droves. In fact, from 1974 to 1982 US equity mutual funds saw net redemptions every single year.”

Go take a look at how the Japanese retail investors invest today — that is our future.

By: Henry

Henry — Thu, 04 Feb 2010 18:01:48 +0000

My question is how did the mutual fund doing for the past 5 years…the last 2 years…Seem like a lot of these guys didn’t have any hedge at all.

By: chris

chris — Thu, 04 Feb 2010 16:13:09 +0000

i know, i know; my thesis, fwiw, is that it makes perfect sense for inventory drawdown to occur first, then increase in orders, both of which we have seen (are seeing); then jobs will pick up since increased orders have to be produced; once jobs pick up, then consumer purchases will increase, and so on; then the talking heads will say it is finally time to buy equities, and people will move their funds from bonds to stocks; so we are still early, but i think there really are green shoots out there now.

By: TPC

TPC — Thu, 04 Feb 2010 15:49:37 +0000

I am not so certain. What concerns me the most in the near-term is that earnings have not served as a positive catalyst despite being VERY good. What will be the upside catalyst once earnings season ends?

By: chris

chris — Thu, 04 Feb 2010 15:47:37 +0000

i too got out of the market when obama lined everyone up behind him (volker closer to him than summers and geithner…reminded me of junior high) and said that if these folks (bankers) want to have a fight, then that’s a fight i am prepared to have…i also stated in a post that i wouldn’t get back into the market until a jobs report turned positive…well, i lied, i got back in this morning…about 7% correction on the S&P and today’s action smells like a buying window…you have to be a bit anticipatory, right?

By: TPC

TPC — Thu, 04 Feb 2010 15:36:26 +0000

I have to agree. The whole “cash on the sidelines” argument is a lazy man’s argument.

By: TPC

TPC — Thu, 04 Feb 2010 15:35:15 +0000

Here’s a taste:

http://pragcap.com/you-should-be-very-concerned-about-the-parallels-with-japan

http://pragcap.com/20-year-bear-market

http://pragcap.com/demise-usa

http://pragcap.com/black-swan

By: TPC

TPC — Thu, 04 Feb 2010 15:31:29 +0000

Hi Gary,

I ignored your comment the other day because it’s quite obvious that you’re a new reader. Anyone who has been around here for more than a few weeks knows that I post a lot of OTHER people’s opinions. This is the work of CS – NOT ME.

I have been out of the market since Obama announced his war on Wall Street. Though I believe this dip will ultimately be a buying opportunity I have not jumped back into the market yet. I have been pretty clear about that.

http://pragcap.com/three-things-i-think-i-think-5

As for the whole balance sheet recession….I was one of the very first people I know of who began actually describing this recession as a balance sheet recession. When everyone else was talking about the Keyenesian stimulus response I was warning of a consumer based debt time bomb that had the potential to wreck this economy for the next decade. I have maintained and still maintain that we are in a bear market that is based on this massive deleveraging cycle. My writings on debt, Richard Koo, balance sheet recessions and deleveraging are ALL OVER the site.

Anyhow, welcome. I try to provide a balanced view of both bullish and bearish perspectives – some of which are mine and some of which are not.

Thanks for reading.