When the Public Comes Stampeding Back in to the Market

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THE RETAIL EQUITY BUYERS HAVE ARRIVED IN THE US.

All aboard the equity train. That seems to be the vibe reading from the stats last week about more big surges of money inflows to the equity markets. The simple breakdown of what happened in January amounts to a record inflow into equity funds and ETFs that blew away the last record in February 2000. According to the Globe and Mail (see link below), we dusted the last record of $54 billion by more than $20 billion ($77 billion). But there are some explanations that gave this number some extra juice including the whole fiscal cliff panic at the end of 2012, and the fiscal rearrangements that investors made at the same time.

http://www.theglobeandmail.com/globe-investor/inside-the-market/rush-into-us-equities-surpasses-dot-com-bubble-record/article8166599/

Obviously, between the US election and the public paranoia over government fiscal dysfunction, the public's investing appetite went into a complete holding pattern at the end of 2012. So the year 2000 comparisons so far are probably heavily exagerrated. 

Finally, keep in mind that stock price valuations at that time in 2000 were at the crescendo of the tech bubble and verging on the absurd, and we were in the process of waving goodbye to the biggest bullmarket of a generation that started in 1982.

Today on the other hand, we are just starting to shake off the $1 trillion fund flow evacuation that happened when the world almost ended in 2008. We have had the most punishing bearmarket since 2000, and valuations are very reasonable and dividend payouts are healthy and rising. 

Look at these great fund flow charts since 2007. Very interesting. http://wallstreetexaminer.com/economic-charts/mutual-fund-flows-charts/

Finally, for those shopping for US investments, our Loonie buys you close to 30% more in stock value than it did back at the turn of this century.

So as you digest the alarm bells in the financial media about the public's historical bad market timing, let's just wait to see the February numbers next month before we all become contrarian at the same time...... Is that a Yogi Berra saying???

TB