Mutual-fund surge worries some analysts

[54anickel]

http://www.kansas.com/mld/kansas/business/7956283.htm

Americans poured a near record amount into stock mutual funds in January, suggesting that last year's rebound from a three-year rout has restored investors' confidence in stocks.

But the inflow of $40.8 billion last month -- the third best for any month since 1992 -- may not be as positive as it appears. Some analysts consider it a sign that investors may be too bullish, jumping into 2003's best bets, like foreign and smaller-company stocks, which have already had big runs.

snip>

Despite the stock gains and all the positive indicators of sentiment, many analysts see reasons to be cautious. The last time money poured into stock mutual funds at a pace like this was in the first two months of 2000. In March, the stock market bubble burst, sending the S&P 500 index down as much as 49.1 percent in the three-year sell-off and the Nasdaq composite index down 77.9 percent

[aquart]

1. Not just the analysts should be worried.

There have been no reforms in the corrupt mutuals industry.

[snippy]

3. True. With the expansion of ETFs I would not invest in mutual funds

unless that was the only way I could participate in the market. But the sleazy mutual fund fraud and excessive fees aside, I think the huge increase in money flows into stock mutual funds is a bearish sign. That coupled with the aproaching end of the massive amounts of stimulus the government has pumped into the economy would make me very cautious right now if I had any money in the market.

[twilight]

8. the mutual fund companies & the brokers are crooks!

I received notices from two different brokerage firms that I was involved with last year via a broker and they were both caught for shorting investors.

I dumped this investment with a slight profit only last year and I don't regret it.

The mutual fund company itself lied to me 3X that I can remember. It may have been more than that. Of the 3X they lied, all would have involved a loss of money to me and this was not exactly recent. Two of the cases were in the year 2001 (April); the other in April of 2003.

I have my money in a CD at the bank. Its drawing 5.25%. That is good enough for me during these bizarre and uncertain times.

:dem: :kick:

[unblock]

2. i have considerable confidence in mutual funds

foreign ones, that is. the dropping dollar should more than make up for any chisling....

[fishnfla]

7. Our debt is owned by foreign interests

nt

[JoFerret]

4. Are there any not tainted or

potentialy tainted by the revalations of criminal misconduct? TIAA-CREF for instance?

[snippy]

5. I have not heard anything negative about the TIAA-CREF mutual funds.

The TIAA-CREF retirement fund managers have been among the most vocal critics of much of the dishonesty and fraud which has occurred both within the mutual fund industry and the NYSE.

[ochazuke]

9. Vanguard is OK

They still follow the principles of founder (and one of the few people in the financial world whom I respect) John Vogel.

He said that when there is no oversight, it's just a matter of time before the looting begins.

Translation: Don't trust the suits.

[54anickel]

6. People are looking for someplace to put their money where the return

isn't negative. Traditional savings instruments are at a negative return once adjusted for inflation. If they aren't comfortable with the stock market, it's about the only choice now.

I know people who came into some money last year. One sold their house because it had appreciated so much, he lost his job, the taxes would be much higher and they could rent for dirt cheap. Sold the house to use part of the money to get by until he can find a job (good luck in his 50s). They are hoping to buy a smaller home once they get back on their feet.

A couple of others I know cashed out part of their 401Ks.

If you go to a financial planner, they'll usually get you into mutual funds. I don't know of many that will hand hold for stock investments.

Sort of stuck between a rock and a hard place at this point.