It seems each passing day we get another piece of data that points to a frothy market. Yesterday I mentioned that investors had ratcheted up their margin accounts at the NYSE to the highest level since February 2008. Today we have a chart from Bank of America that shows the inflows into long-only equity mutual funds, have hit their highest level since March 2000.
We can use this type of data to get a feel for how individual investors are getting positioned. The fact that there has been this large of a mad rush into equities is a little scary.
From Business Insider:
$22.2 billion flowed into equity funds this week, marking the second-largest weekly inflow in history.
Inflows into emerging market equity funds this week were the largest – at $7.4 billion – of all time.
“A new year, memories of 2012 returns, zero rates, the “fiscal whiff’…whatever the reason investors capitulated into equities this week,” writes BofA strategist Michael Hartnett.
Other big winners were long-only mutual funds, which recorded $8.9 billion in inflows this week – the largest since March 2000.
This doesn’t mean we can top tick the market based solely on mutual fund flows. But coupled with the other data we’ve been looking at, it’s hard to understand how things could keep rocketing higher. At the end of the day price is what rules and that’s what we will respect. However, I’m seeing an increase in yellow and red warning flags – it’s just a matter of if/when the market decides they matter.
Source: Investors Are Staging One Of The Biggest Moves Into Equities Of All Time (Business Insider)
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