Investors yanked a record amount of money out of stock mutual funds in March, but now that they've paid

Uncle Sam

and stocks are chugging north again, that loving feeling appears to be back.

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Redemptions outpaced investments into stock funds by $20.6 billion in March, according to the latest figures from the

Investment Company Institute

, the fund industry's largest trade group. That's a new record for one-month outflows from stock funds in dollar terms.

But preliminary fund-flow estimates indicate that money flowed back into stock funds' coffers in April, when the major stock indices charged north led by the tech-laden

Nasdaq Composite's

15% gain. This proves the old saw that money flows into stock funds when Wall Street is splashed with sunshine and gushes out when the gutters fill with rain.

Surely some stock-fund redemptions in March were due to investors' need to raise cash to pay their taxes, but it's hard to imagine performance didn't play a role. At the end of the first quarter, the Nasdaq was down more than 58% from a year earlier and the

S&P 500

was off more than 22%, according to

Baseline/Thomson Financial

. Just one stock fund category, small-cap value funds, was up since Jan. 1 at that point, while the average big-cap growth and technology funds, top-selling categories in 2000, were down 35% and 61% over the past 12 months, according to

Morningstar

.

Fund flows are always closely watched as a barometer of investor sentiment. While some will see these outflows as a sign that pessimism and stock prices are bottoming, others could use the same data as evidence that outflows will be a burden on stock prices.

Here's why: If outflows persist for several months, fund managers selling stock to cash out rattled shareholders can add an unforeseen dollop of selling pressure on already battered stocks. This can trigger a vicious cycle in which sagging performance begets outflows, begetting even worse performance and more outflows.

While stock funds' net outflows set a record in March, the outflows represented just 0.6% of total assets. In comparison with the other four highest one-month outflows for stock funds, that's not too high. In October 1987 and November 1988, stock-fund outflows added up to 3.1% and 1.6% of assets, respectively.

Then again, both February and March of this year cracked this inglorious top-five list, showing how sour fund investors turned on stocks after they invested a record $309 billion into stock funds last year.

Another stark indication of fund investors' shaken faith in the stock market is a comparison of first-quarter flow data for this year and last year. Through March 31 last year, stock funds took in $140.4 billion, compared to just $1.2 billion through the first 90 days of this year. At the same time, flows into bond and money market funds are way up.

Of course, it looks like stocks' bonny April is reviving flows to stock funds. U.S. stock funds were in the black by $7.4 billion, according to liquidity tracker

TrimTabs.com

. That's less than a third of the money they took in a year earlier, though, indicating that it will take more than a month for buy-and-hold fund investors to do more buying and holding.

Fund Junkie runs every Monday and Wednesday, as well as occasional dispatches. Ian McDonald writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

imcdonald@thestreet.com, but he cannot give specific financial advice.