Retail Investors Embracing Stocks, Says WSJ

by Philip Morton, Investors Offshore.com

26 August 2003

A Wall Street Journal report has suggested that although the recent stock market rally has seen retail investors pour money into equities, this may not be enough to prove that the bull market is back.

Citing recent Citigroup estimates, the WSJ revealed that US retail investors pumped nearly $19 billion (17.1 billion euros) into equity funds in June, the fourth consecutive month in which the amount has increased. Meanwhile, their European counterparts were also bullish on equities, ploughing around 5 billion euros ($5.56 billion) into stock funds.

Although the report suggested that the signs are good for the coming months, it also observed that many investors who had their fingers burned during the bust period are unlikely to embrace the markets with anywhere near such abandon as they did during the 1990s.

'Retail money tends to chase, rather than predict, trends. Should markets start to fall again, retail investors will likely rush for the exit just as fast,' the business daily predicted, continuing:

'That has certainly been the experience of US bond funds, which suffered an outflow of $16 billion in July just a few weeks after their markets tumbled.'

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