Glug glug glug - cash drains out of stocks

Money continues to flow out of the stock market. A report by Bloomberg News today cites research by the Investment Company Institute and EPFR Global reveals that investors have pulled roughly $75 billion out of equity funds since April. The news that equity outflows have now topped outflows in the five months following the collapse of Lehman Brothers made our hearts skip a beat, and drove the Marketplace Daily Pulse two notches lower today.

About $177.7 billion has been removed during the past 30 months from mutual and exchange-traded funds that invest in U.S. shares as the benchmark gauge for American equity rallied as much as 102 percent, before falling 17.9 percent through Aug. 8, Bloomberg reported. Investors pumped in $18.7 billion during the first four months of 2011, before removing about four times that amount since.

So where's all that money going? A lot is going into bonds. Bloomberg aid bond funds added $42.3 billion from the end of April through July and started posting weekly outflows last month. Since the bull market began, fixed-income managers have received a net $666.4 billion.

The last time equity fund outflows exceeded $40 billion during a four-month period was in August 2010, the data show. The S&P 500, which completed a 16 percent decline the previous month, went on to gain 13 percent through November. Monthly outflows in the last two years exceeded $10 billion seven different times. The S&P 500 advanced the next month in five of those cases, according to Bloomberg data.

About the author

Paddy Hirsch is a Senior Editor at Marketplace and the creator and host of the Marketplace Whiteboard. Follow Paddy on Twitter @paddyhirsch and on facebook at www.facebook.com/paddyhirsch101
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Re your broadcast this morning about the outlook for the near (or future) jobs opportunities - one thing I do not hear is this - the elephant in the room.

We have a growing dependency on technology in the workplace, and a growing population. What used to take 20 people to put together an automobile (probably), now takes less than a few.

where are the job going to come from? and especially for someone who has been out of work for a year or more - while new technology zooms ahead.

That is THE question, Marilyn. What jobs are there out there for unemployed Americans? We are ceding manufacturing and agricultural production to other parts of the word, and increasingly becoming a service economy. It's true that technology can replace jobs, but it's also true that there is no limit to our ability to innovate. The challenge will be for us to educate ourselves and our children to take advantage of changes in the jobs marketplace. That means constantly retraining on new technology, and watching the workplace for gaps that we can fill. There's a great special feature in the Economist this month on this issue. Well worth a read because it goes right to the heart of the issue, much as your question does.

Automation is truly a grave concern to the world. What is now outsourced will eventually be automated. What percentage of the workforce being replaced by AI would create a massive demand crisis? 10%? 20%? At the rate technology continues to grow in power and speed, this is a near certainty.

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