People Still Don't Believe {Part II}

On Tuesday {two posts below this one} I discussed that people are still reluctant to believe in this secular bull market we've been having these past several years.  One of the things I noted in that post in regards to investors sitting on cash was this thought: "While I don't know what the majority of them will end up doing with their cash I do know that it's not beating a rapid rush into the markets.  Its grudgingly syphoning in.  For investors that's a good thing.  There's no long term euphoria built up yet.  The public doesn't believe yet.  It will take many years for them to do so again.  When they do will be the time to be longer term concerned."

Dr. Ed Yardeni over at his blog today posted a chart and some numbers that backs up what I've been saying.  Here's his chart and commentary.  

"Over the past 13 weeks through the week of August 28, the Investment Company Institute estimates that bond funds had net cash outflows totaling $438 billion at an annual rate. Over the same period, equity funds had net cash inflows of $92 billion at an annual rate. I wouldn’t describe that as a “Great Rotation” just yet, but it could be the start of a big swing by retail investors into equities."

The math on those numbers says just 21% of those dollars found their way into the equity markets.  Now I'll throw in one caveat which is that I don't know if international funds are represented in these figures.  While I don't know the exact number, I do know that fund flows into the international space has picked up over the summer.  Even so these figures suggest a sizable dollar figure that's just sitting in cash right now.  The fact that it's not jumping straight back into stocks is longer term bullish and is also the fuel that can potentially carry stocks higher in the future as long as the economy continues to grow.  

Link:  Yardeni:  "The Great Rotation?"

Again a schedule note.  I'm out on business Friday and Monday.  I will have a full week starting next Tuesday.  Thanks.