Retail fund flows continue to be moving toward the safe haven of bonds and away from stocks. In the latest period ending Wednesday, $10 billion was redeemed from domestic equity funds, and $12 billion flowed into bonds. This continues a steady, multiyear outflow out of stock funds that commenced way back in 2007.
The timing couldn't be worse as it relates to the retail investor.
At best, my expectation that the reallocation rally (selling bonds and buying stocks) will immediately commence in the summer months ahead must be scuttled. At worst, the Facebook IPO (and the recent market swoon) will add more strikes to the hearts of individual investors, keeping them away from stocks over the balance of the year. (Retail investors have already endured two large drawdowns in stocks since 2000, a lost decade of investment performance, a flash crash, stagnating incomes while the necessities of life increase in cost.)
Josh Brown, who deals with scores of individual investors in his capacity as a money manager, underscored my view that the Facebook IPO was another blow to the individual investor community.