Stock market investors continue to pile into domestic equity, and if you’re not already heavy into U.S. stocks … you better get in quick.
Data from Thomson Reuters’ Lipper service last week showed that U.S. stock investors piled $11.84 billion into domestic equity funds, the most since late January. Considering that the stock market had already rallied about 15% by then, that’s pretty huge.
If you think there’s no more room to run for stocks, then consider that this influx came as investors moved past fears of a pullback in the Federal Reserve’s stimulus — the so-called tapering that has been dominating headlines lately. As soon as the market got some positive vibes from Ben Bernanke, it was off to the races again.
This from Reuters:
“Funds that hold only U.S. stocks accounted for most of the gains in the week ended July 10 and attracted $10.74 billion, the most since September 2011. Volatility fell over the week as U.S. investors were less rattled by the prospect of the Fed cutting its bond-buying later this year.”
Domestic equity has outshined everything else since Thanksgiving. Interest-bearing assets haven’t borne much of anything since the Great Recession, and recent rate rises have causes bonds to fall. Emerging markets have been getting gutted, including China and Brazil as well as smaller players like Indonesia and Turkey. And Europe remains … well, Europe.
There’s always the risk of buying a top after a big run like this, and of course America has its problems with persistently high unemployment and another earnings season characterized by little to no growth.
But judging by where the money is going, there are still plenty of buyers for U.S. stocks. That should, at worst, give your portfolio decent support.
And at best, continued buying pressure will send stocks even higher.
- That new money coming in this June wasn’t a top, obviously, with stocks at new highs. (CNBC)
- Bernanke continues to talk U.S. stocks to new highs … but China is still dead money. (The Slant)
- Of course, ETF outflows may show money on the way out of the market … even if U.S. stocks are in favor. (ETF Universe)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.