On Wednesday, The Investment Company Institute (ICI) estimated the outflows totaled $40.29 billion, the sharpest outflow since a $59.63 billion decline in October 2008. The latest outflows were led by funds invested in U.S. and foreign equities totalling over $30 billion. This figure is completely insane, considering that the S&P 500 was trading at around 850 during October 2008 and currently its at 1140. If we actually add up last four weeks of outflows, we get a figure that is close to $60 billion! It seems that majority are fleeing into cash or bonds. Bond funds have actually been huge winners, adding $75 billion in deposits this year, according to ICI. Confidence in the stock market is despairing, and with it the retail investor crowd. Apparently a good reason for selling out right now is that the Euro banks are finished and this is Lehman II!
Or at least CNBC and Bloomberg were very busy telling you this all day yesterday, even though we haven't even made a new low just yet. The media seems to be spreading fear faster than a winter flu. I cannot recall how many times news anchors mentioned that this could be a repeat of 2008. I guess we are a product of our recent experiences throughout life and the nightmare memorises of 2008 are still alive and well in all of us. It seems that the investment community, and especially retail investors, are scared to death of even hearing that there is a possibility that 2008 is going to repeat all over again.
And what do we make of those European banks that have been taken to the slaughter house in recent months? You got these media "intellectuals" telling you it would be totally insane and absurd to buy these assets. As a matter of fact some of them are even suggesting ideas on how to short them.
Now... I'm not bullish on Financial Sector at all. But after such an incredible fall and a massive spike in the VIX, you'd think we were very close to some type of a wash out. Why the hell would you bother shorting banks right now as so many pundits recommended last night on CNBC? We got an outright panic here, which usually signals the end of the collapse and even possibly some type of a rally for a few months. You'd think this would be completely obvious... but hey what would I know.
You are better off listening to CNBC, buying some bonds and selling your stocks right now, if you want to make a lot of money! *rolls eyes*