Kass: Really!?! With Dougie
Really!?! Warren Buffett? Really!?!
To all those managements that have now gotten more aggressive in buying back their company's stock and/or are suddenly enticed to acquire: Where were you when the S&P 500 was at 1100, 1200 or even 1300?Really!?! Managements? Really!?!
One of the more important points made in the above "SNL" parody is that there is little relationship between the price of the S&P 500 and domestic equity fund inflows. I have long written that the great rotation is a bogus concept and not to count on individual investor. I prove this with the help of Seabreeze's analyst interns (Nick Pollari and Kelley Hopkins) who have performed an analysis of the relationship between stock prices and fund flows from February 2007 to December 2012. Below is our research output. Correlation between monthly S&P returns and:
- total equity fund flow = 0.197
- domestic equity fund flow = 0.073
- total bond fund flow = -0.183
- total fund flow = -0.088
- total equity fund flow = 0.039
- domestic equity fund flow = 0.005
- total bond fund flow = 0.034
- total fund flow = 0.008
- total equity fund flow = 0.492
- domestic equity fund flow = 0.096
- total bond fund flow = -0.066
- total fund flow = -0.036
- Of the 40 months of positive monthly S&P returns, 20 months (50%) experienced a positive S&P return while total equity fund flows were negative for the month.
- Of the 29 months of positive total equity fund flows, there were nine months (31%) when the monthly return on the S&P was negative despite positive flows.
- Since February 2007, total equity fund flows have been down $480 billion while the S&P (excluding dividends) has appreciated 1.1%. Domestic equity fund flows have been down $616 billion while the S&P (excluding dividends) has appreciated 1.1%.
- Since January 2008, total equity fund flows have been down $304 billion while the S&P (excluding dividends) has appreciated 71.9%. Domestic equity fund flows have been down $397 billion while the S&P (excluding dividends) has increased by 71.9%.
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