Mutual Fund outflows - capitulation sign?

[Gardnr]

According to this website - TrimTabs Newsroom - $43 Billion was taken out of equity mutual funds during the week ending Wed Oct 8. That compares with $75 Billion outflow for the eight months ending Aug 31 and $41 Billion for the month ending Sep 26.

That's a boatload of money and helps explain the meltdown. I wonder how much came out on Thurs and Friday?

I really don't have a good perspective on how that compares to normal market conditions but I'm sure it's a very large deviation and very significant. Average Joe/Jane surely seemed to be running for the exits, as suspected.

Interesting to note that $22 Billion was taken out of bond funds in the month ending Sep 26. That flight to quality we witnessed.

Also interesting that they don't use the word billion on that site but instead express it as 1,000 million. I wonder why?

 

[jazz4cash]

Interesting to note that $22 Billion was taken out of bond funds in the month ending Sep 26. That flight to quality we witnessed.

Also interesting that they don't use the word billion on that site but instead express it as 1,000 million. I wonder why?

Before this crisis, I thought a flight to quality meant bond fund inflows, but I guess now it means going to cash.

I assume it dawned on someone that many don't exactly know what a billion is. The term seems to be getting much more use lately...we had a post about that on here the other day.

 

[Marquette]

I assume it dawned on someone that many don't exactly know what a billion is. The term seems to be getting much more use lately...we had a post about that on here the other day.

Like my wonderful co-workers passing on a chain email that cleverly made it look like AIG was getting an $87 trillion dollar bail-out...

 

[Gardnr]

Like my wonderful co-workers passing on a chain email that cleverly made it look like AIG was getting an $87 trillion dollar bail-out...

Yeah, that friggen' thing sure was making the rounds, eh? It's amazing how many people pass that stuff along without looking at it with a critical eye. Even supposedly educated people.

 

[Gardnr]

Before this crisis, I thought a flight to quality meant bond fund inflows, but I guess now it means going to cash.

Yep, this flight to quality was unlike anything seen in some time. T-Bills basically yielding nothing but a safe return of money.

 

[audreyh1]

Flight to quality usually means Treasury bonds or cash.

This time around, the flight to quality was to really short term treasuries (T-bills).

Audrey

 

[Grep]

If you are still looking for capitulation, welcome to last week. ;-)

Of course, we haven't seen what next week has in store for us yet.

Cheers.

 

[FinanceDude]

According to this website - TrimTabs Newsroom - $43 Billion was taken out of equity mutual funds during the week ending Wed Oct 8. That compares with $75 Billion outflow for the eight months ending Aug 31 and $41 Billion for the month ending Sep 26.

That's a boatload of money and helps explain the meltdown. I wonder how much came out on Thurs and Friday?

Don't know, but there's $8 TRILLION or so in MF, so adding the total for the year is $159 billion out of $8 trillion, so that's 2%............Even if the number is down to $6 trillion, it's 2.5% of all assets..........yet another fact being distorted.........

 

[Gardnr]

Don't know, but there's $8 TRILLION or so in MF, so adding the total for the year is $159 billion out of $8 trillion, so that's 2%............Even if the number is down to $6 trillion, it's 2.5% of all assets..........yet another fact being distorted.........

Oh I realize that, and it's all relative. I'm not really sure how to assess this and how statistically significant it is. I haven't done thorough research by any means.

It sure helps put downward pressure on the market though. And hopefully will help put upward pressure on it as it flows back in, after I'm done buying!

 

[Canadian Grunt]

We haven't hit the worst of the recession yet so I expect there will be more outflows. More significant is the inflows as they show the confidence level of investors on the recovery side. Wonder what they are. Anyone know?

 

[FinanceDude]

I'm sure VG didn't have any outflows.........where's CFB to tell me that??

 

[ziggy29]

We haven't hit the worst of the recession yet so I expect there will be more outflows. More significant is the inflows as they show the confidence level of investors on the recovery side. Wonder what they are. Anyone know?

Could be -- but keep in mind that the stock market, as a forward-looking mechanism, tends to bottom out sooner than the economy. Many powerful recovery rallies occur before the economy has hit bottom because the market believes the bottom is not far away.

Given the general "it's different this time" sense of panic, though, that economic bottoming out may be a fair bit of time away.