Market Crash Claim #4: Investors Are Pulling Out of Stocks
Something bears point to that’s signaling a market collapse is a decline in trading volume, both on the major exchanges and within the nation’s big brokerages.
There are a few problems with this, especially the fact that it’s been wrong throughout the rally. Commissions and market volume have been weak for years now, and that hasn’t correlated with market performance at all.
Besides, it’s not really true. Yes, for much of the rally, individual investors sat on the sidelines or put their money to work in bonds. But now they’re coming back to stocks. In February alone, more than $8 billion went into domestic stock mutual funds, according to the Investment Company Institute, vs. only about $2 billion to taxable bond funds.