Madeline Schnapp at TrimTabs writes via email …

TrimTabs flow research shows that retail investors are stuffing money into the mattress. So tell me again how all this money printing by the Fed has helped retail investors?


Via Press TrimTabs says “Retail Investors Shun Speculation and Stuff Money under the Mattress“.

Sausalito, CA – January 13, 2012 – TrimTabs Investment Research said today that in the first 11 months of 2011, investors poured eight times more money into checking and savings accounts as they did into stock and bond mutual funds and exchange-traded funds.

“The Fed is doing almost everything in its power to entice investors to speculate in overpriced asset markets,” said TrimTabs Executive Vice President David Santschi. “But retail investors aren’t taking the bait.”

In a research note, TrimTabs explained that $889 billion poured into checking and savings accounts in the first 11 months of 2011 (complete data for December 2011 is not available). This inflow was more than eight times greater than the $109 billion that flowed into stock and bond mutual funds and ETFs.

“It’s remarkable that inflows into checking and savings accounts outstripped inflows into stock and bond mutual funds and ETFs in each of the first 11 months of 2011,” said Santschi.

Santschi added that in the latest three months from September 2011 through November 2011, the $139 billion inflow into checking and savings accounts was almost 13 times higher than the $11 billion inflow into stock and bond mutual funds and ETFs.

“Most portfolio managers desperately want to believe the economy will improve so they can pocket bigger bonus checks for 2012 than they’ll be taking home for 2011,” said Santschi. “But the economy isn’t likely to get off to the races as long as investors are stuffing most of their money under the mattress.”

Money Under the Mattress Video

Link if video does not play: Santschi’s Daily Edge 1/12/2012: The Real Money Goes under the Mattress

Is this a Contrary Indicator?

Retail investors are frequently a contrary indicator. Is that the case here or is this simply reality setting in? Another option is boomers out of work via retirement (forced or voluntary) need to tap into their savings to live or to maintain lifestyle.

My guess is retiring boomer demographics is clearly in play here, and a combination of related ideas are the driving force behind what TrimTabs reports.

  1. Retail investors finally realize things are not as good as portrayed by government and mainstream media
  2. Retail investors believe things are not going to get better soon
  3. Volatility is unnerving
  4. Some boomers are tapping savings to maintain lifestyle
  5. Some are tapping savings because they are out of a job and have to

Simply put, retail investors have given up and are not coming back. Some can’t because they have no job. Others won’t because they have had enough.

Mike “Mish” Shedlock
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