Dan Weil: “Investors Flee Stocks in Biggest Way Since 2011” – Money News

Posted on :Feb 11, 2014

By: Dan Weil

Money News

February 11, 2014

Investors took $28 billion out of equity mutual funds in the week ended Feb. 5,  the largest weekly outflow since August 2011, when Washington was fighting over  the debt limit, according to Citigroup and EPFR Global.

The Standard & Poor’s 500 Index has slid 2.4 percent so far this year, though it has  rebounded for the last three sessions. Investors are worried about weakness in  the U.S. and overseas economies.

Institutional investors are responsible  for the large shift out of equity mutual funds, according to Goldman Sachs. They  are eager to diversify out of stocks after last year’s strong  gains.

“A  divergence between institutional and retail activity has surfaced,” Marc  Irizarry and fellow Goldman equity analysts write in a commentary obtained by CNBC.

Institutional  investors are rebalancing their portfolios to avoid being overweight in stocks,  the Goldman team says.

And “a broader definition of equity” has led  institutional investors away from standard stock investments and into absolute  return and natural resource funds, they explain.

“These points run  counter to the view of a ‘rotation’ toward equities and instead favor  non-traditional bonds, alts [alternative investments] and innovative equity  product,” the Goldman analysts note.

Meanwhile, Ned Davis Research says  a bear stock market, generally defined as a decline of at least 20 percent,  isn’t out of the question for this year.

In a recent report, the firm,  which has been bullish on stocks for most of the rally since March 2009, says it  expects continued gains for now, The  Wall Street Journal reports.

But the firm warns that if  investors grow overly enthusiastic during the next several weeks, sending prices  too high, the market could tumble later in the year.

Gold Goliath is not your typical gold dealer.

Visit Us On FacebookVisit Us On TwitterVisit Us On Google Plus