The conventional wisdom is that retail investors, and not institutions, have powered the market’s rally off the March 2009 lows. Not so, says Charles Biderman, CEO of TimTabs Investment Research. The firm tracks the flow of money in and out of mutual funds. Since the start of May, he says, “U.S. equity funds have taken in a modest US$7.1B” despite improved performance. Instead, retail investors are plowing money into bond funds. Moreover, Biderman says that individuals did capitulate in the heat of the crisis, having been burned twice in the last ten years. The retail investor is not in the market yet, but history tells us that they will be, Biderman expects them to come in to the market in 2010.
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