Interesting data here from Merrill Lynch Research who note that institutional clients and hedge funds have been net sellers of equities in the last 5 weeks while private clients (retail investors) are still net buyers:
“Last week, during which the S&P climbed 0.7% to another new all-time high of 1692, BofAML clients were net sellers of US stocks for the second consecutive week. Large, mid and small caps all saw outflows. By client type, net sales were led by institutional clients, who have sold US stocks for the past five weeks. Net sales by this group were the largest since March, and the sixth-largest in our data history (since 2008). And on a four-week week average basis, outflows by institutional clients are the largest in our data history. Hedge funds were also net sellers for the second week in a row, while private clients bought stocks for the eighth consecutive week. While private clients’ cumulative net buys of equities year-to-date are entirely due to ETFs, this group has been a net buyer of single stocks in seven of the past eight weeks. The last time this occurred was amid the market correction following the US credit rating downgrade in August 2011. In our view, continued purchases of single stocks by this group would suggest ongoing confidence in the bull market, as this group has largely shunned single stocks over the last four years.”
Source: Merrill Lynch
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.