money market question

Institutional flows are the biggest component of the market, I believe. There are a lot of pension funds and insurance companies and family endowments, worldwide.

I presume this observation includes mutual funds? In addition, there are hedge funds, which could be institutional investors or individual investors.

If this means a zero flow of funds

The conventional wisdom (I've never seen this proven) is that individual investors always have it wrong. When they are buying stocks, we are closer to the top than the bottom (1999). When they are selling stocks, we are close to the bottom.

This not any kind of proof, but is some interesting data. One of my favorite contrarian indicators is the American Association of Individual Investors sentiment index.

Bullish 28.57% -- long term average is 39.2% Neutral 17.14% -- long-term average of 32.9% Bearish 54.298% -- long-term average of 28.0%

The bearish reached it's record peak in August 1990, just before the first gulf war rally. It reached it's record low in August 1987 just before the October crash. The bullish reached it's peak in January 2000 and it's low in November

If you believe the current data, the market still has some room to run.

-- Doug

As someone else suggested, we have been ambiguous (and in violent agreement). The NAV of the fund includes the dividends it receives (from the underlying portfolio), the dividends it has not yet paid out, but not the dividends it has paid out.

(This differs somewhat from the benchmark index, which drops immediately when an underlying stock distributes a dividend; the fund drops, say quarterly, when it passes through those dividends to its shareholders - long term, no difference aside from expenses.)

Mark Freeland snipped-for-privacy@sbcglobal.net