This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Americans, Once Again, Miss Out on Stock Rally

BOSTON ( TheStreet) -- It's going to take a lot more than yesterday's 3.4% gain in the S&P 500 Index to lure fed-up mutual fund investors back to the fold.

Americans have been in full flight this year, withdrawing $84 billion from U.S. equity mutual funds through Oct. 11 versus $83 billion for all of last year, according to TrimTabs Investment Research.

With yesterday's gain in the S&P 500, the benchmark index is up 14% this month, the biggest monthly increase since 1974. The reason for the rise was Europe boosting a rescue fund to 1 trillion euros ($1.4 trillion) while investors agreed to a voluntary writedown of 50% on Greece's debt.

The rebound came after September's steep decline, a month in which the combined assets of all U.S. mutual funds, including stock, bond, hybrid and money market funds, decreased by $582 billion to $11 trillion.

Investors have lost confidence in the markets due to their volatility, but the asset drop is also driven by a move to more cash-like investments and ETFs, said Leon Mirochnik, a TrimTabs analyst. "I don't think it's a loss of confidence in fund managers, absolutely not," Mirochnik said.

If the current trend of outflows continues, 2011 is likely to be the fifth consecutive year that domestic stock mutual funds have seen significant investor redemptions. Since 2007 through Oct. 11 of this year, investors have pulled $4.1 trillion out of such funds, according to TrimTabs.

They've been stampeding out of equity funds this year on the volatility caused by the European sovereign debt debacle, the weak economy and directionless public policy at home.

The typical individual investor has "an enormous amount of fear of the future and skepticism" about governments' ability to solve the economic problems plaguing the nation and Europe, said Adrian Day, founder and president of Adrian Day Asset Management, an asset-management firm based in Annapolis, Md., with clients who have investment portfolios that average about $750,000.

And that is coincident with the first wave of baby boomers entering retirement. Most have known relatively stable and rising equities markets in their personal investment histories, so the past five years has shaken their confidence in stocks, such that they've switched to ultra-conservative investments such as cash and bonds, and they're not looking back.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs