an tSionna {04.19.12} Gains Come In Spurts.

One of the things we've discussed a few times in the past year is the fact that money has continued to leave equity mutual funds and most of it finds its way into bond funds. {Most recent comment on that is here.} Now some of that money may be going into ETFs, but for the most part it's left the market.  If it's leaving because people have had it with the markets or because they've decided to do different things with the money that's an investment decision.  I've long thought that the greatest competition the markets may have the rest of this decade is people in their early 50's to mid-60's  looking at the Florida, Texas and Arizona markets and deciding that they'd rather take the money they could put in stocks and buy a retirement place while prices are cheap. 

But I also know that a lot of that money is parked in cash waiting for the moment when it's right to get in.  Put away the argument that this cash has missed a pretty good move, the bigger point to be made is that stocks when they move, move in chunks.  They seem to break out power forward for a few months and then consolidate.  That's been the pattern since the late 90's.  Unless you have a system that signals you to go all in or all out and you consistently stick to that system then money that sits on the sidelines probably never gets in.