Watch What They Do, Not What They Say

CNBC Guest Blog December 21, 2010

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In an article at Registered Rep, we get evidence that investors are retreating from the bond fund mania en masse"”inflows slowed from $21 billion in October to only $6 billion in November. The cash is now hitting money market funds ($24.7 billion in November). Investors have not begun purchasing stock funds just yet, but they've stopped selling them; can net inflows be that far behind?

"Although equity outflows continued in November, they were not as negative as they have been. During the month, $4 billion was pulled from U.S. stock funds, compared to $6.3 billion in redemption's in October and $16.3 billion in September."

I believe that December and January may turn out to be watershed months as bond fund flows could turn negative for the first time in, well, forever.

Meanwhile, equity fund flows may turn neutral or even bullish. We won't know how this actually plays out for a few weeks but from my conversations with investors and the action on my monitors, I think I'm on the money.

While investors tell surveyors that they are scared of stocks and will never own them again, the data tells us that they are in denial at best, disingenuous at worst.

In truth, retail investors have ceased liquidating stock mutual funds and within the next few months, may even become net buyers.

Watch what they do, not what they say.

RELATED LINKSCurrent DateTime: 02:26:00 21 Dec 2010LinksList Documentid: 40751541Investing News: Expert Analysis, Investment Tools, Stock Screeners, and Financial Strategy InformationKaminsky's Call: Why Stocks Will Trade Higher in 2011Predictions 2011: The Big Picture

__________________________________Joshua Brown is a New York City-based financial advisor at Fusion Analytics and the author of The Reformed Broker blog. The opinions he expresses are his own and do not constitute an invitation to buy or sell any securities.

I believe that December and January may turn out to be watershed months as bond fund flows could turn negative for the first time in, well, forever.

While investors tell surveyors that they are scared of stocks and will never own them again, the data tells us that they are in denial at best, disingenuous at worst.

In truth, retail investors have ceased liquidating stock mutual funds and within the next few months, may even become net buyers.

Watch what they do, not what they say.

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Watch What They Do, Not What They Say

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