There’s do doubt about it: We’re in a bull market and it keeps on hitting record highs. It’s generated more than $12 trillion in paper profits. Yet investors remain wary – some even feel terrified – of stocks.
The numbers are definitely puzzling. In January, U.S. stock funds had net inflows of $18.4 billion, ending nearly two year’s worth of cash outflows. But the investor momentum stopped almost as soon as it began. In recent weeks, investors have been back to yanking money out of the stock market – more than $4 billion in the week ending May 1 alone, according to data collected by the Investment Company Institute. That outflows are happening at a time when the U.S. economy is definitely on the mend and arguably in its best shape in two years!
That’s not all. In the first quarter, net inflows to bond funds climbed to nearly $70 billion. That compares with the somewhat paltry $19.1 billion of net inflows into stock funds during the same three-month period. Bonds, with their high prices and low yields, are a horrible investment right now. The question is, when will investors get that message?