I suggest my bullish friends read these thought, some may call them ramblings.
I am very disturbed by the continued out-flows of mutual funds...one of the keys that I use to gauge investor and consumer confidence is the money flows into/out of mutual funds and equities. U.S. tax-free money market funds saw $1.3 billion of outflows in the latest week, lowering total assets to $272.7 billion. TrimTabs.com reported that investors withdrew $3.5 billion from stock funds in the prior week, the week of the initial bounce from the recent reactionary lows, and those withdrawals accelerated this week to an additional $5.4 billion. AMG backs this up as they claim Stock Funds saw $4.6 Billion Outflow In Week Ended August 14th Investors withdrew a net $4.6 billion from equity funds in the week ended Wednesday, according to AMG Data Services. More than 65% of the net outflows came from domestic equity funds, which is down from record-high levels seen a few weeks ago. Real Estate, a sector of calm throughout the recent market turbulence, and healthcare/biotech funds reported inflows for the third consecutive week. Investors continue to flee the tech sector as technology funds reported the largest outflows since late May. Wall Street players are also bailing out of the rocky Japanese markets. Japan equity funds reported the largest outflows seen since late May of last year. Investors seem to be taking comfort in the bond sector, with taxable bond inflows totaling $1.2 billion. Government funds investing in mortgage-backed securities and investment grade corporate bonds are receiving a large influx of the incoming monies.
I have a couple of questions the BULLS should really sit back and ponder...If consumers were feeling that the bottom was definitely in then why were they taking even more money out of their funds this week? In retrospect if they are using this money to fund their current purchases then the so-called unstoppable consumer may just be about tapped out. When we reflect upon the recent surge in bankruptcies, we find a startling statistic. Americans have been filing for bankruptcy in record numbers during the difficult economic times of the past year, according to statistics released by the federal courts Wednesday. Courts around the United States recorded more than 1.5 million bankruptcy filings during the 12-month period ending June 30, the largest number ever recorded, according to the Administrative Office of the U.S. Courts.
Also, once the consumer is done spending for those deeply discounted big ticket items such as cars, trucks, home refurbishing, pools etc.... what's left is being spent on consumable items like clothes, food, housing, education, toys, etc. Once spent this money is GONE Forever!!
It is not and will not be available in the future for investing in the so-called great investment vehicle of the century the Stock Market…again. That money is lost to the market and while it is adding fuel to the current economic situation the resource is very limited, and is drying up, this will not bode well for the markets in the short term is also a limited resource. Just my humble opinion for what it is worth...an opinion that you will not find on CNBC, CNN, of the other hyping media groups tied into the Wall Street malaise.
Best of Luck
Steve
