Friday, April 24, 2015

Is this the business cycle at work .... or something else?

April 24 COTD

A new Bank of America Merrill Lynch survey published Friday finds that US investors have pulled $79B out of equities year to date — including net outflows in 9 of the past 10 weeks — despite stock prices continuing to break new record highs.

9 comments:

  1. This seems puzzling. Is this because people are afraid that they're riding another high before a crash? Could that be an explanation? It seems very bizarre that the two are so drastically different.

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  2. That's really strange...I was hoping the article might offer some explanation for the disconnect. Could the money be moving to international markets or something like that?

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  3. I am under the impression that that maybe the disconnect is because this graph was based off a survey. Other than that, it would make sense that a correction in the market would occur in the future.

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  4. This graph should be worrisome to the investors that are still riding the stock market up. I know we discussed the likelihood of a market correction, within a year or two in Dr. McKinney's Monetary & Fiscal Policy class. It seems from this survey $79B worth of equity investors are speculating a market correction is near. I do agree with Nolan though, I would like to see more evidence of this disconnect in further studies.

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  5. That graph is pretty frightening. The bull market has lasted a very long time. I agree with Tyler that we are probable due for a market correction soon. The sharp decline leads me to believe that maybe they are on to something.

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  6. This graph is baffling, somewhat scary and a little questionable. I also agree with Nolan that this could be due to the setup of the research being a survey. I also believe that the market could be predicting a future market correction. It will be interesting to see the outcome.

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  7. I have to agree with everyone that this graph is strange and hoped that it would offer more of an explanation as to why this is happening. I also am wondering if people are thinking we are riding another high before a crash as Taylor pointed out. Either way I wonder what the outcome will be.

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  8. I agree that we're due for a market correction soon. With such a large discrepancy between the rising prices and net outflows, it seems almost intuitive for a pending market correction. It also seems as if this may be the result of system wide financial engineering (including the stock buyback strategy mentioned in a different post).

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  9. I agree with the above statements. I think that if setup of this research study was different, we may have observed a different result outcome and, possibly one that may not be as hard to believe. Also, I think it would be interesting to observe whether or not we witness a future market corrections.


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