Investors pulled a net $320bn from mutual funds in 2008, a record in both dollar terms and as a percentage of assets. Equity funds had outflows of $233.5bn in the year to December 29, with bond funds seeing outflows of $58.2bn and balanced funds – which include both securities – having outflows of $28bn, according to Emerging Portfolio Funds Research.
However, it appears that outflows stabilised and even reversed in the final weeks of the year. Investors put a net $23bn into equity funds during December and withdrew only $3.5bn from bond funds.
Stocks are now in very strong hands, meaning that if those holding stocks right now were not scared out of stocks by the crisis period of 2008, it is going to be very difficult to spook these people. They are long term holders. Further, given that M2 nsa is growing in excess 0f 20% on an annualized basis over the last three months, the stock market is set for a huge, and I mean huge rally.
The fear may be over. Up to the plate next, somewhere in 09, major inflation.
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