Investors Buy and Sell At The Wrong Time!

We've noted in the past that individual investors often are buyers and sellers at the absolute wrong time.  We've also discussed here certain examples of this such as in March of 2000 where we saw the largest influx ever of money into mutual funds right as the market was rolling over into the next two years bear markets and the Gulf War lows in March of 2003 when investors liquidated said funds at a rapid clip.  Now Blackrock is out with a graphic representation of just how wrong footed investors can be.  The chart above shows S&P 500 Index performance versus 12 month equity mutual fund inflows.  Here's their comments attached to the chart:

"Unfortunately, investors often take actions counterintuitive to investing best practices. In an ideal world, investors "buy low, sell high." Though the rule seems simple, we've often seen investors do the exact opposite, especially during volatile times. For a few examples, look at historical mutual fund flows versus the performance of the S&P and note how the most flows went out when market prices dropped...and were set to rally."

Also in the for what it's worth department for those that worry about a bubble in stocks, notice that current mutual fund inflows {last blue bar on the far right} are nowhere near the levels that have marked past historic market peaks.  Some of that likely reflects the market share stolen by ETFs but even accounting for that, individuals haven't completely bought into this rally as witnessed by what they're actually doing with their dollars.

Link:  Blackrock.com: Investors Chasing Performance
*Long ETFs related to the S&P 500 in client and personal accounts.