Stock prices rally, but investors drop out

Stock prices have been buoyant in the opening weeks of 2012, but rallying stock prices may not stop investors from staying away from the markets

By , Guest blogger

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    Trader Gregory Rowe works on the floor of the New York Stock Exchange in this file photo. According to Brown, stocks have been rallying since Christmas, but investors are opting out.
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It is unbelievable how much investors seems to despise the stock market here at the start of the year.  The first week of January is typically a time of inflows and optimism - of signing gym membership contracts and plowing that year-end bonus right into the ole' brokerage account.

Not this year.  Stock prices have been rallying since just before Christmas but investors want no part of it so far.  ICI is reporting stock fund outflows of more than $9 billion for the week ended January 4th...

Equity funds had estimated outflows of $9.35 billion for the week, compared to estimated outflows of $5.10 billion in the previous week. Domestic equity funds had estimated outflows of $7.06 billion, while estimated outflows from foreign equity funds were $2.29 billion.

Should the S&P truly (and finally) breakout, expect a hard reverse in this data.  People change their minds very quickly when fear of loss is replaced by fear of not keeping up with everyone else.

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