Retail Investors Withdraw From U.S. Markets at Fastest Pace Since 2004

For the 10th week in a row, irrelevant retail investors withdrew money from the market — the longest streak since 2004. If the sheeple knew anything at all, this might be a statistic worthy of fear. But, as in previous periods of massive withdrawals, this one will end up being meaningless.

Thirty billion has been removed from markets over the past two and a half months, according to a Bank of America report issued on Thursday.

The main beneficiary was European and Japanese stocks, who enjoyed $36 billion in inflows, most likely due to dollar weakness over that timespan.

Is retail sophisticated?

Of course not. They’re simply being guided by larpers on CNBC and idiot advisors who prompt them to make changes, for the sake of conducting a transaction. The pitch is simple. The dollar is careening lower. Trump is gonna crush your portfolios. Sell now and buy France.

Here are the sectors with the largest outflows:

Source: BAML

Technology — $600 million, largest in 49 weeks.
Financials — $35 million, second straight week.
Consumer — $1.5 billion, third largest ever

As far as the ark (treasuries) is concerned, something that now enjoys 10% of my assets, it has attracted the largest inflow in 10 weeks, or $900 billion. That’s a lot of cheddar.

High yield bonds were largely ignored, posting $2.2b in outflows.

“This is definitely weaker U.S. equity inflows but still net positive and my sense is that positioning is still long and the VIX back at 11 shows there is still complacency,” Ilya Feygin, managing director and senior strategist at WallachBeth Capital, said Friday. He estimated U.S. stock exchange-traded funds, passive investment products which have risen in popularity over mutual funds, gained $6.1 billion in net inflows since June 30.

I realize the there is a contradiction in my way of thinking here, accusing people who flee stocks to be irrelevant submentals, while the people pouring into bonds are Einstein tier geniuses. However, you must admit, ordinary Joe never buys TLT — always semis and other tech related nonsense. It is not an urban legend to suggest that ‘smart money’ is in the bond market — but instead a fact.

What does it all mean?

Perhaps both assets can continue heading higher — stocks and bonds in unison. I place zero credence into equity outflows because equities aren’t beholden to retail anymore, but instead of hedge funds, advisors and trading desks.

There is a seasonality factor to consider here too.

According to Exodus, both August and September are, by far, the worst months to be long stocks.

What do you think?

(Revelation: I don’t really give a shit what you think)