Investor’s Business Daily – Mutual fund investors don’t seem to have much faith in the U.S. stock market these days. Despite a smart rally — the S&P 500 is up 7.3% since its Oct. 13 low — money has been coming out of U.S. stock funds.
Investors have pulled a net $500 million out of U.S. stock funds since August, according to the Investment Company Institute and TrimTabs.
During the same period they’ve shoveled $60.9 billion into international funds, which have been performing better.
At first glance, that might seem like bad news for those rooting for the U.S. market. After all, it takes new money to drive prices higher.
But in the perverse ways of the stock market, it might actually be good news for U.S. fans.
The reason: The crowd is usually wrong at the major turning points in the market. Most investors are too afraid to step in just as stocks get ready for a sustained rally. And they throw money greedily into the market just as they should be reining in their enthusiasm.
