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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01
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To: Bucky Katt who wrote (11588)9/13/2002 1:42:00 PM
From: Jibacoa   of 13094
 
The problem with the mutual funds is that when people put money in they have to buy stocks which was the reason the investors gave them the money for.

When people start taking the money out, they will be forced to sell stocks, (it is like getting a margin call since they bought with borrowed money.<g>)

There is no question that such a large amount of money concentrated on a relatively few hands, does accelerate the up-trend or down-trend in some of the mutual funds larger holdings.

And one problem is that the down-trend usually goes at a faster pace than the up-trend.<g> (You very rarely if any get to see a "panic buying", but "panic selling" is not that rare.)

Some mutual funds when they get too large an influx of money, may be closed to new investors, but if they get a fast withdrawal of money the situation may be similar to a "run on a bank" as they may not be able to sell stocks in the middle of a "panic selling".

Bernard
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