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U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday

 
Anonymous Coward
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07/26/2007 05:04 PM
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U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
FUNDWATCH
U.S. mutual-fund assets drop $5.5 billion
Second biggest sell-off in 2007 seen as investors panic over credit meltdown
By Murray Coleman, MarketWatch
Last Update: 1:51 PM ET Jul 26, 2007


SAN FRANCISCO (MarketWatch) -- Outflows in U.S. mutual funds on Tuesday hit an estimated $5.5 billion, according to TrimTabs Investment Research.

That would amount to the second-biggest outflow of the year, according to the data tracking firm. Only a $6.5 billion outflow on Feb. 27 was greater.

"Fear and ignorance seem to be gripping retail investors these days," said Charles Biderman, chief executive of Santa Rosa, Calif.-based TrimTabs on Thursday, pointing to ongoing concerns about subprime lending and slumping housing markets.

"There's no credit risk; no bank is going to lose money on this subprime fear," he added. "Income-tax collections are strong, and you don't have a housing collapse when wage income and job growth are surging."
Biderman said that Tuesday's outflows seem to have trickled into Wednesday, although final estimates won't' be available until later in the week.

"This is a complete panic by individual investors," he commented. "They just don't know what's going on."
'This is a complete panic by individual investors. They just don't know what's going on.'

— Charles Biderman, TrimTabs Research
During the past five trading days, U.S. equity funds lost an estimated $7.6 billion. By contrast, the biggest down day of the year in February came after Chinese stocks plunged 9% in a day on fears of rising inflation.

The TrimTabs chief is advising that investors take lower pricing in stocks as an opportunity to buy more of their favorite mutual funds. "Credit markets have been lending outrageous sums on very favorable terms. But it's not like they're stopping completely. They're just slowing down," Biderman said.

"Companies will continue to buy other companies. Any belief that credit-market turbulence spells the end to this year's bull market is ridiculous."

Biderman pointed out that the amount of new cash takeovers in July is already the fifth-highest monthly amount by his records. Even if new cash takeovers dropped to zero, actual stock buybacks in July are running roughly double the daily rate as during the past month. "Portfolio managers panicking now are selling based on fear rather than facts," he added.

Balance shifting

An area where a pullback has been seen in recent weeks is high-yield bonds. Industry analysts are bracing for more issues of so-called junk bonds to be delayed or pulled completely in coming months.

"As we move into the fall, we're expecting more delays as credit markets tighten," according to Ken Monaghan, a portfolio manager at ING Investment Management.

"The market is clearly nose-diving right now in terms of prices," he said. "But it's not in keeping with what we're seeing in terms of corporate fundamentals."

Underwriting standards had been very loose until quite recently, Monaghan added. But within the past month, analysts say that lenders under regulatory pressure have been setting tougher terms. Legal restrictions governing how much firms can borrow also are stiffening.

'The balance has shifted from lenders to investors in loans and high-yield bonds.'

— Ken Monaghan, ING Investment Management
Such a turn in lending practices is largely being blamed on the ongoing subprime-market meltdown, Monaghan commented. "But there's a huge amount of loans that need to be syndicated to fund large leveraged buyouts and acquisitions in the pipeline."
That's a change from earlier in the year. "Buyers had been scrambling until very recently to find supply," he said. "Now that's not the case, as the balance has shifted from lenders to investors in loans and high-yield bonds."
Institutional investors aren't selling their bond funds carrying more credit risk, according to Monaghan, who runs high-yield bond portfolios for pension funds, endowments and foundations.

"Given the repricing taking place, we're getting phone calls from institutional investors asking about new opportunities," he said. "That includes both adding to their portfolios as well as buying into the high-yield market."

Standard & Poor's has come out with new research showing that its latest data on 12-month default rates for junk bonds dropped to 1.12% in June from 1.2% a month earlier. That counted both the U.S. and foreign corporate issues.

In the United States alone, which dominates the market, junk-bond default rates are running at 25-year lows, according to S&P analysts.

"As long as the economy doesn't go off a cliff, this is a technical correction that's not justified by the underlying fundamental picture," Monaghan added. "It's a significant reaction to supply and demand issues. Most bond investors are sitting on their hands and waiting or doing some selective buying."

Murray Coleman is a reporter for MarketWatch in San Francisco




[link to www.marketwatch.com]
Anonymous Coward
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07/26/2007 08:30 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
wtf
Anonymous Coward
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07/26/2007 09:28 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
"There's no credit risk; no bank is going to lose money on this subprime fear," he added. "Income-tax collections are strong,


what is that I dont like in that statement?

Bank are not losing money because of income taxes, yes that exactly correct.

tax money go to the privarte banks, thank for the confirmation.
Jomama

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07/26/2007 09:31 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
"This is a complete panic by individual investors," he commented. "They just don't know what's going on."

Whatever you do keep the Matrix pumped up.


1rof1
to herd or not to herd
[link to djomama.blogspot.com]
Anonymous Coward
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07/26/2007 09:43 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
I particularly liked the Talking Heads on MSNBC
as they frantically assured investors that there
was nothing wrong; no reason to get hysterical
and no reason to do anything with that 401-K.

Sure. I believe that. Don't you?
Anonymous Coward
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07/26/2007 10:10 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
"Fear and ignorance seem to be gripping retail investors these days,".........ER ITS THEIR MONEY AND IF THEY HAVE BEEN IN FOR THE RIDE --THEYVE MADE $$$ AND WE WOULDNT WANT THAT TO HAPPEN?????? ---said Charles Biderman, chief executive of Santa Rosa, Calif.-based TrimTabs on Thursday, pointing to ongoing concerns about subprime lending and slumping housing markets.

"There's no credit risk; no bank is going to lose money on this subprime fear,"
Anonymous Coward
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07/26/2007 10:44 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
"Fear and ignorance seem to be gripping retail investors these days,"


These goons have never heard of gut feeling and intuition? LOL!
Anonymous Coward
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07/26/2007 10:47 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
The rich insiders are selling their stock paper holdings.

They know what's going to happen soon.
Omega
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07/26/2007 10:53 PM
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Re: U.S. mutual funds saw "panic" outflow of $5.5 billion on Tuesday
There's no credit risk; no bank is going to lose money on this subprime fear," he added. "Income-tax collections are strong, and you don't have a housing collapse when wage income and job growth are surging."
Biderman said that Tuesday's outflows seem to have trickled into Wednesday, although final estimates won't' be available until later in the week.

"This is a complete panic by individual investors," he commented. "They just don't know what's going on."
'This is a complete panic by individual investors. They just don't know what's going on.'<<<<<<<<<<


This complete utter bullshit deserves.......

[link to www.youtube.com]

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