Attached is a chart from Lipper Associates called Cash Track. Just when markets are bumping along the top, investors are moving back into equity funds (upper left chart). Since November they had been net pulling out of equity funds.
Furthermore, money market fund flows are negative which hasn't been the case for a long time.
Historically, individual investors are known for moving into equities at precisely the wrong time and moving out of equities at the wrong time. Mutual fund flows are a good proxy of those flows.
Bond fund inflows are very high, as well, when we have historically low interest rates. If rates turn North, the value of those bond funds will shrink. And, at low rates, the “shrinkage” will be more severe.
Understanding history is key to understanding the current environment.
Stay well read, be informed and be successful!
