“According to BofA, investors have been selling individual stocks while buying ETFs. Last week BofA tallied up $400 million in net outflows from U.S. stocks, the note said.”
And that post suggests that investors are just “kinda greedy” instead of extremely greedy…
“Bank of America’s Bull & Bear Indicator…remains solidly below the level that would generate a sell signal for the stock market. Additionally, the CNN Fear & Greed Index, designed to measure investors’ emotion, recently moved out of ‘neutral’ and into ‘greed’ but remains below ‘extreme greed’.”
Investors in some of these high-flyer stocks might take their cue from institutional fund managers. They are trimming stocks that have hit target prices. They might be moving funds to less volatile sectors or even risk-off assets. On the equity front, monies are rotating to financials, value, small cap, with energy ETFs setting an inflow record. Of course, we mentioned the great potential for Canadian energy producers in late October of 2020.
It’s called rebalancing, of course, and that is practised when we hold individual stocks as well. But rebalancing is not necessarily the greatest strength of the retail investor. We might face FOMO—fear of missing out on higher prices.
I’ve recently trimmed some of our U.S high-flyers and I’ve also set new sell targets. It’s just a normal part of rebalancing. My wife and I are in the retirement risk zone, within 10 years of retirement. If you are early in the accumulation stage, you might have the ability to ignore and embrace the volatility, if you also have a high risk tolerance tolerance.
And there will be no missing out on higher prices if they are attained. We still hold positions in those stocks. The higher prices will simply mean more profits that are (for our situation) moved to risk-off assets such as bonds and gold, other commodities and cash.
I will rinse and repeat.