RETAIL INVESTOR CONSENSUS (Negative Consensus/Bull Market Indicator) See ya

August 31, 2015

It appears the roller coaster ride the stock markets took last week, were enough to force the retail investor out.

"Since July, American households -- which account for almost all mutual fund investors -- have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse."

"Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds, said economist Dana Saporta."

It is at these precise moments of market hysteria, that investors choose to get out of all their positions, i.e. throwing the baby out with the bathwater.

It is at these precise moments of market hysteria, that investors choose to get out of all their positions, i.e. throwing the baby out with the bathwater.

The 2008 bloodbath is very much ingrained in investors mind and when you wake up and see the Dow Jones Industrials go down 1000 points in the first hour of trading, you first instinct is to not hang around to see how the story ends. Unfortunately for the retail investor consensus they tend to make these defining moves at the precisely the wrong time, choosing to throw the baby out with the bathwater, also known as selling low and buying high. Should this exodus continue, it could mark a compelling moment to start going shopping and building positions.