OT: From today's Harry Newtons daily column: technologyinvestor.com
First, private investors -- what Wall Street calls retail investors -- are livid and totally fed up. They're bailing out of the market big time. This takes two forms. They are selling their entire stock portfolios en masse and they are selling (also called redeeming) their entire mutual funds. And they are dumping the money in money market funds or other short-term instruments.
Second, mutual funds, in order to meet the huge redemptions are basically selling all the companies they've made money on in recent months. That includes the HMOs, the drug companies, the brokerage and financials, the home builders, etc. This accounts for their recent surprising weakness.
Third, companies with share buyback programs in place are buying back their own shares like crazy.
Fourth, the hedge funds are sitting on the sidelines with their "finger on the trigger" ready to start buying big time the moment they detect a positive turn in the market. But, having been burned so often in recent months by "suckers' rallies," they're being very, very cautious and staying on the sidelines, for now.
Conventional wisdom says that "retail is ultra-dumb." Retail sells at the bottom and buys at the top. QED, says conventional wisdom, we're at the bottom. And there's going to be a sharp rise up shortly. At least that's the theory. |
