Having placed money in bond and money market funds last month, investors have since reversed that trend and started returning to equities. Net outflows are relatively rare, usually following cataclysmic events like the August 1998 Russian and Asian financial crises or the 1987 stock market crash. Investors may have viewed 2000 and the 2001 first quarter as a slow-motion crisis and pulled back from equities. But the worst may be over in their view.
Some professionals see the amateurs' opinion as a sign that the opposite is true.
In April, the trends reversed rather dramatically as money came back into the markets. Though for some reason, the conventional wisdom never seems to adjust to reality. The fringe individual investor attempting to time the market tends to do everything too quickly, says Vince Boberski, an economist at Dain Rauscher. That these investors see the bear market as over is a sign it will fall further, he says. But Boberski also notes the flow of funds in both months is small and that the majority of mutual fund investors has been remarkably steady.