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Interesting articles in the Wall Street Journal Yesterday! April 16, 2010

Posted by shaferfinancial in Finance.
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I found it interesting that these two articles were in the Wall Street Journal yesterday.  Speaking about investor sentiment the article said this:

“Simply stated, the number of stock-market bears is near the lowest level in a generation, says Blanco Research’s James Blanco.  Oddly, subscribers are ignoring the message.  US stock mutual funds buying remains anemic, while money flows to bond and emerging markets funds.  The sell signal?  When small investors finally start running with the bulls.

And in a different article from one page before:

“Cash Flows to Mutual Funds. Stock funds had inflows of $4.84 billion in the latest week up from $382 million a week earlier. Assets dropped another $31.49 billion in money-market funds this week.

Well…well…well, so after a run up of almost 80% folks are now getting in.  How predictable.  And one expert says this is a sell signal.   Hmmmmm…….

Meanwhile the initial media report from the latest Dalbar Studies of investor behavior has the average investor beating the S&P 500 last year by 6%.  This means that there were probably a lot of folks who panicked and sold out before the bottom and then got back in sometime in mid 2009.  Great job folks, but was it luck?  And the 20 year look back [really only way to make sense of the data] still shows significant underperformance by investors compared to the index!

All this emotional trading holds to what we understand of human psychology.  The fear now is that folks will be left out of the market bull.

Happy investing!

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