It might seem counter intuitive, but it’s happening.
Even as the major U.S. stock indices reach record levels, U.S. investors are draining money from mutual funds and exchange-traded funds with exposure to the stock market. Investors yanked out $4.5 billion last week, extending the longest streak of withdrawals since the spring of 2016.
At the same time the S&P is up 3% for the year already, more than double the gains of any other developed nation.
Investors are looking for a safe haven for the dollars, and have chosen taxable and tax-free municipal bonds. Last week investors plowed $17 billion into bond funds, after investing $24.7 billion into such funds the week before.
That leaves hedge funds and institutions as the main buyers of U.S. equities. If we get a pull back in the markets, individual investors will be the ones that bought low and sold high.