Individual Investors are buying the dip in US markets

Just like Indian retail investors, US individual investors too have been following the similar trend of buying the dip in US markets.

Some interesting highlights:

  • Investors have poured in more than 100 billion dollars in 2022

  • As one can see in the below chart, Markets saw 6 straight years of outflows including 2015 and 2018 when S&P was negative. This time the trend seems to be “buying the dip”

US Mutual funds are increasing cash exposure

  • As per Goldman Sachs Group Inc., Mutual funds have increased their cash positions to about 2.5% of their portfolios this fall, up from around 1.5% at the end of last year and the highest level since early 2020

What about hedge funds and institutional investors?

  • Just like mutual funds, hedge funds are cautious.

  • Net bearish positions tied to stock futures hit a record high over the summer, according to Deutsche Bank data, a sign that asset managers and hedge funds were bracing for stocks to keep tumbling.

  • Meanwhile, one measure of how exposed hedge funds are to the stock market—the share of their positions invested in bullish stock positions versus bearish—has fallen to the lowest level since early 2019 among funds tracked by Goldman.

Link to the full article by Gunjan banerji

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Retail investors have taken buy the dip very seriously.

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Despite a hawkish stance, the bond market isn’t buying the Fed’s 5.5% terminal rate. The 1-year yield is still around 4.6%. Maybe, that’s why stocks aren’t selling off.

I’m anyway in the ‘inflation is transitory’ camp and I think the Fed has tightened too much already.

Honestly knowing S&P500 Mcap is around 35T USD. I am not sure how big this 100B USD really is.


exactly… the rate hike is not reflecting on Fixed Income… same is with India as well. recent hike is not reflecting in TBILLs

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Yep. Market seems to be betting on a paise sooner than later.

Commodity prices have cooled down considerably as well. That gives bit of a comfort.

Higher base effect will start kicking in from early 2023 and that is giving some comfort

The market’s worry may shift from inflation to growth from next year, which is also why I think that bonds may be a better investment than stocks right now.