Zeev's Turnips Patch-No Politics (ZEEV)

[TJ Parker]

What about the 5 straight months of strong equity mutual fund inflows? Or is that too obvious an explanation for the rally.

yes, that does not explain the rally. here's the data (from amgdata.com):

July Equity Fund Inflows $17.4 Bil
June Equity Fund Inflows $19.9 Bil
May Equity Fund Inflows at $13.1 Bil

2nd Qtr-Equity Fund Inflows $46.0 Bil (includes may and june above)
1st Qtr-Equity Fund Outflows ($5.9 Bil)

but in comparision, peak quarters for the last two years (from trimtabs.com):

2nd quarter of 2001 was 47900
1st quarter of 2002 was 45779

in brief, fund inflows alone don't account for the magnitude of the rise we've seen.

but then, money alone isn't sufficient. after all, mufu's (mutual fund managers) could sit on cash. its their willingness to chase stocks at any price that has this effect. and likely, it will last as long as they have money coming in and are chasing performance. lets see what happens if we have a month of negative flows.