Zeev's Turnips Patch-No Politics (ZEEV)

[TJ Parker]

> Zeev, "fear of missing it" is very strong right now precisely
> because investors minds have been conditioned over many decades
> that markets always go up.

we were talking about mutual fund flows the other day, and i pulled up the historical data from trimtabs (through 2002).

http://www.trimtabs.com/charts/spreadsheets/us_equity_funds_flow.xls

however, one thing that struck me - and even struck me more strongly now that i took another look to confirm - is that the move in and out of funds over the last two years has been pretty negligible. in fact, pretty much net 0 in or out over the last two years, while 2000 saw nearly 250B flow in.

anyway, the striking observation is that, in aggregate, all that money that came in during the 90's is still there, since net flows over the last two years are almost 0. so, yes, the conditioning worked well: on the average, they're waiting it out.

so then the question becomes: is the typical investor really waiting to take all of the money in his money markets or bond funds and plunge them into the stock market? or is he/she just waiting for everything that's still sitting there to be worth something again?

[in edit]

hmmm. looking at the most recent daily report and comparing it to the s&p or nazdaq

http://www.trimtabs.com/pdf_files/daily_mutual.pdf

i have to say, i don't think i believe that individuals are "chasing" the market. at least not during late july and early august. looking at the daily flows, it clearly seems (to me) like these guys are trying to time the market (on average). although maybe its just because i focused on the nazdog and the tech sector funds, which probably do attract more timers than an index fund.