Discussion in 'Economics' started by wilburbear, Oct 5, 2008.
The reason they have been declining is BECAUSE of the redemptions, IMO.
The question is when is it over???
High mutual fund redemptions would signal Joe Retail getting out of the market. This would be a great contrary indicator.
According to ICI, mutual fund redemptions don't always correlate with stock market decllines nor do redemptions drive market price levels. Hmm, I would have thought otherwise.
Unfortunately the data is two months in arrears. However the latest data from ICI does show a distinct, although small rotation from stock mutual funds to bond and money market funds. Net redemptions from stock funds ytd about 1.3 %. Even though total stock fund assets value have decreased due to the decline in the stock market values, it appears that there's been no mass exodus from stock funds via redemptions. So the stock funds have held up well as far as redmptions so far, in spite of the market decline.
Total US market capitalization has fallen 31% since last summer.
I couldn't find the exact data for stock funds as a percentage of the total market capitalization, but I'm guessing it's about 35%.
The rehtorical question is, where is the buy in point and when?
Probably right. If Joe consumer hits his pain threshold, it's probably right around the bottom.
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