I've been hearing from the media lately that people are fleeing the stock market. The notion was started by a story in the NYT, considered reputable, but every now and then, makes huge mistakes -- ie: weapons of mass destruction.
If you're looking at the daily stock market swings, you might be inclined to buy the idea.
But the media is not so good when it comes to economic or financial reporting. They tend to report in a hysterical manner.
If there is a double dip recession, which nearly every economist says is highly unlikely, it will be brought on single handedly by the media talking about it all of the time, scaring people out of their wits.
But back to the stock market. Turns out, it's just not true:
What’s more, equity mutual-fund outflows are largely a function of retired people withdrawing their money from the stock market. They would normally be offset by the flows of working people who are putting their money into the stock market. But those people are increasingly moving away from mutual funds and towards ETFs. And if you look at the ETF data, there was positive net issuance of another $38 billion in the first six months of 2010 — significantly more than Bowley’s $33 billion figure. Sure, some of that will have gone into bond and commodity funds. But most of it will have gone into equities.
So the big picture is clear, although you’d never guess it from reading Bowley’s story: people are still putting more money into the stock market than they are withdrawing from it. Read the whole thing at Reuters