April 19, 2016

With the DJIA and S&P500 around 18000 and 2100 respectively today and now not far off all-time highs, we thought the following stats might be interesting.

Investors chose bond funds in March to the tune of $31.9 billion dollars. That was the largest inflow to bond funds since January of 2013. By contrast, U.S. stock funds only saw $2.4 billion of new money.

We would argue that this is a positive development for the equity market. There is obviously still a tremendous amount of skepticism about the current bull market. There is an old saying, “bull markets climb a wall of fear”. We believe there is much further upside from here though there will be some volatile periods along the way.

Oh, by the way, the last time the inflow to bond funds was this high the stock market ended the year up 32%. Not a prediction but, we remain optimistic intermediate to longer term even though it sometimes seems like a contrarian view.

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