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Fickle Investors Flee Stocks Again

"Investors" had returned to stocks so far this year, as I noted a few weeks ago. According to data from the Investment Company Institute (ICI), however, that trend has reversed over the past couple of weeks, along with the decline in the stock market. Having put $29 billion into stocks as of February 23rd, investors have now taken $2.3 billion out of stocks in the following two weeks. That amount was comprised of $4.3 billion being taken out of US stocks, and $2.0 billion being added to international stock funds.

The data above doesn't even include the reaction to the Japanese disaster and recent market declines. In a week, the ICI will release that data.

Good News for the market
While data comprising only two weeks is far from a trend, I consider this some good news for future market movements. I previously noted that the trend of investors returning to stocks in droves was my number one reason for fearing the market was overvalued.

These investors should really be called speculators, and have a knack for timing the market wrong. Don't you be one of those herd-following speculators. Instead, keep your eye on the portfolio allocation ball, rebalancing when needed, and rest assured these bad times, like many others before them, will not last forever. As my friend Jill Schlesinger wisely says, the stock slide is good news for your 401(k).

More on MoneyWatch
Investors Buying Stocks Again
Japan and the Market Meltdown
Measuring the Bear and the Bull

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