I think reckless bottom fishing should be declared an extreme sport. Many investors, who jumped in too early, based on who knows what reasons, are seeing their portfolio values heading further south—again.
MarketWatch reports “Mutual fund flows back in the black.” Take a look at some highlights:
The mutual fund industry has had little to cheer about, but January’s flow numbers offer a bright spot. Investors put cash to work in all fund types — stock, bond and money-market — reflecting the first positive month for the industry since May.
Lipper data for January show total net inflows of $94.3 billion into mutual funds. More than two-thirds of that, $68.3 billion, went into money-market funds, while bond and stock funds saw net inflows of $14.3 billion and $11.7 billion, respectively.
In December, money-market funds saw net inflows of $127.4 billion, but bond and stock funds both suffered net outflows of $6.7 billion and $27.3 billion.
If I focus on the December data (stock funds), it shows that investors on balance got out of them even as the market was heading north again after the beating it took in November.
In January, everybody was back watching the CNBC cheerleaders and $11.7 billion flowed back into stock funds representing the bottom fishing efforts of the masses. With the continued sharp sell offs in February, more losses have been accumulated in only a few weeks.
Buy-and-hold and bottom fishing investors are being eaten alive as this bear market deepens. To be clear, I absolutely get no pleasure out of seeing so many investors doing the wrong things.
On one hand, I am delighted that trend tracking has helped thousands of people get out of the market in a timely manner; on the other hand, I am saddened that I was not able to spread the word more and help those tens of millions of people who sat on the deckchairs of the Titanic and watched without a clue as to what was about to happen.
Again, I am asking you, if you like my blog and weekly newsletter, to spread the word to as many people as you can; those investor who are helped because of your efforts will be forever thankful.
Comments 3
Ulli,
Most people that I know who bottom fish in the this kind of market start out shallow fishing and end up deep sea fishing with no luck at all.
T.M.
I like the old saying you can lead a horse to water but you cant make it drink. Most people would rather stay uninformed and hope for hope and count on a little luck. Hope SUCKS!!!!!! Snoobers
Exactly. Then they bury their heads in sand, not even wanting to look at their monthly statements. Maybe it is not their fault. People are fed the usual rubbish about long term investing every day of their lives on TV, in magazines and newspapers, and by the experts who look good in bull markets, so it is no surprise that most folk do not get twitchy until they are down 30-50%. Not even the stock brokers actually learn anything new!
Thankfully I discovered technical analysis before the last bull market here (Australia). I look forward to reading Ulli’s new book.