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FBN’s Charlie Gasparino on retail investors getting out of stock funds and the impact on the markets.
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With -- and Europe and worries about the bond market.
Would think investors would be perhaps moving into US stocks is somewhat of a flight to quality.
Well not so says Charlie Gasparino he's got the exclusive details well not you know an average -- retail investors who generally as you know invest in mutual funds.
Are doing just the opposite he's a pretty fascinating numbers we at the fuss is network has had the latest estimate.
From the investment company institute on mutual funds inflows and outflows it's actually outflows its outflows from US.
Stock mutual funds.
But occurring over the last three years.
Here's what we we know.
In March they're being into the EI CI's estimating eleven billion dollars flowing out of US stock funds.
That's twice as much.
As January and February now the markets the average retail investor is telling people something.
Number one this to but they're Thomas they're afraid of these market's number two they're doing telling they're telling the president.
And -- -- and congress that the economic recovery is not happening because generally the other way it works is people put money in US stocks.
Particularly when they think the economy's doing better when corporate profits are gonna -- the average investor has now poured into this recovery.
And we should point out that this is something's been going on for about 45 years since 2007 -- they have missed an amazing run up and they have but you know that's not just the story here -- the story here.
Is about how the retail investor is scared.
They're putting their money in very low yielding bonds bond funds and bonds they're bidding up treasuries I mean there is a massive flight flight to quality going on here.
And yes you -- point out.
-- they -- huge recovery they missed the Dow from going from six to twelve we should point out that -- the outflows from bond funds.
But -- in 2009 was only down to like a marginal amount 29 billion dollars.
Of over at at -- and the US stock funds that's pretty good that's the year that the president was coming his stimulus package.
-- a lot of other stuff but following that.
Because the economy didn't get better.
The the outflows -- could be increased and what's interesting about this year is that a lot of people really do think this is a recovery whether it's tepid or whether it's gonna lose steam and a few months.
What people think unemployment going down marginally.
We're getting better we're getting better GDP numbers you would think people going back in and they haven't we should also point out.
One of the reasons why stocks are up for -- and -- this is a big professional investors doing some of this so when you have 0% interest rates.
They can buy very cheap and you forced the professional investor out on.
Out in the risk on the risk curve and that means buying stocks and commodities which is what Ben Bernanke wanted two years ago when he gave us Jackson Hole speech but he also wants to retail in this.
What I don't -- -- keep -- Polly wants because you know as parents what's called the retail investor slower dumber money they have missed out.
And it's it's unfortunate for some people but if they were ought to have we don't have 401K -- utilities have done very well you tell them to get in it now.
No one not telling anybody anything obvious thanks Gary out of an opulent shot with a -- have been fearful -- -- -- hysteria about this market I believe is that it is propped up not necessarily by a bad economy I mean the US stock market.
It is propped up by technicalities.
And that's what's scary about that's why you don't know whether to go in or out when you have 0% interest rates and so many other stuff that.
They're doing you know somebody you know the Fed to QE1 QE2 and you need -- we kind of three everything that he retail investors seem to self logic.
This doesn't compute stock shouldn't be this high.
And that's when financial markets to go down there is a logic to this -- volume has been food for the past five years infected had to -- -- -- their their entire estimate of what regular volume is down with the New York style table is this is not good news politically I could turn this into political -- is mainly a market story.
But there is a political story the average investor.
And that's the average people you know average people own formal occasion mutual fund they've seen a brief flight they do not -- -- but they're pulling money out.
They do not believe.
In this president's economic policies but.
To be fair and balanced since President Obama took office you can look at the Dow Jones industrial since 2009 to look at the NASDAQ up a couple of -- remember -- remember why we've had a flight.
To increase risk because you have 0% interest rates.
You're not you have to -- some let's say the end justify the big issue push towards economic growth Lester well it was Nevada coming you're looking at -- 23% to -- -- I don't think it was 2%.
I think was -- I could be wrong -- -- -- on the 2% -- -- -- and police here tomorrow --
