With many of the major stock indexes hitting new all-time
highs, a lot of "warnings" are being sounded that this rally is
too much too soon.
, real estate investor Sam Zell compared stocks to the biggest
housing boom in American history.
"This feels like the housing market of 2006," he said.
"Everybody feels they can't afford to miss it."
Though he wouldn't predict where equities will go, Zell
sees a strong resemblance to housing, telling CNBC, "We are
suffering through another irrational exuberance." While daily
headlines now trumpet new highs for the stock market, he said,
seven years ago they were about the rise in home prices.
Where's the Exuberance?
Yet the money flow data doesn't support the idea that
investors are pouring into stocks.
, for the week ended April 3, just $1.25 billion went into equity
mutual funds. $3 billion was put into world equity mutual funds
and $1.8 billion was taken out of domestic funds. This was the
week that the S&P 500 first hit a new high.
By contrast, bonds continued to be the investment of choice
for mutual fund investors with inflows of $6.4 billion. Bonds
have outpaced equity mutual funds in inflows all year.
shows a slightly different story. In the month of March, $17
billion flowed into equity
with the majority, or $16.6 billion, going into US and North
American funds. Fixed income ETFs saw just $5.6 billion for the
month but it is telling that investors continue to put money into
Many experts predicted a "rotation" from bonds into stocks
this year but the data is showing that that is NOT happening.
Bonds are as popular as ever.
Have we been so tainted by bubbles over the past 15 years,
with the dot-com and then the housing bubble, that every bull
market now seems like a bubble?
Or are investors truly throwing caution to the wind and being
irrational when it comes to stocks?
SPDR-DJ IND AVG (DIA): ETF Research Reports
ISHARES TR-2000 (IWM): ETF Research Reports
NASDAQ-100 SHRS (QQQ): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
To read this article on Zacks.com click here.