Investors love stocks: Weekly inflows best in four years -

Cross posted from: David Berman The Globe and Mail We reported recently that Bank of America strategists are expecting a “great rotation” out of bonds and into U.S. stocks this year. So far, things are going their way – but you have to wonder if this sudden interest is a cause for concern. Investors have been notoriously shy of stocks during the recent bull market, with trading volumes low and stock ownership proving a hard sell. For all of 2012, a net $3-billion (U.S.) flowed into U.S. stock funds and exchange traded funds, which is tiny.

But for the week ended Wednesday – which coincided with the recent resolution to the U.S. “fiscal cliff” crisis – interest in stocks picked up in a big way: A net $18-billion flowed into stock funds, sailing past the biggest week of inflows in 2012. In fact, according to Bank of America (via The Wall Street Journal), the week’s inflows mark the biggest since June 2008 and the fourth largest since 2000.
The trend appears to be global. According to EPFR Global (via Bloomberg News), $22-billion flowed into equity funds around the world during the same week, which is the second biggest inflow into stocks for data going back to 1996.

If this marks the start of a trend in which small investors become reacquainted with the upside of equities, the stock market could get a nice boost. Investors moving into a market, after all, tend to drive prices higher. And there are some good reasons for a move into stocks: The U.S. economy is likely to get a tailwind from a recovering housing market and an increase in state spending, for starters.

Globe And Mail

Cash Floods Into Stock Funds 

Wall Street Journal