According to this recent report from Citi investors during the week of Feb 5th pulled record amounts of cash ($24 billion) from U.S. stock funds while putting almost $15 billion into bond funds.

The S&P 500 returned 125% from its low in Mar 2009.  Most investors sat on the sidelines seeing their shadows and predicting 6 more years of winter.  Then the complaints rolled in that markets are rigged, the “rich” are to blame, etc.

YTD the S&P 500 is down 1.9%.  Is this the reason investors pulled all that money from stock funds?

Behavioral finance is written all over this story.  Investors panicked in the wake of Lehman, AIG, Fannie, Freddie, etc.  They waited until it was “safe” to pile back into stocks in 2012 and 2013 meaning they bought in at substantially higher prices than they sold when they pulled the covers over their eyes in 2009, 2010, 2011, etc.  Now that the S&P 500 has pulled back the tiniest bit fear and panic grip again.  “Oh no, another disaster is right around the corner.  Must panic.  Act now to feel like I’m doing something.”

When will people learn to get out of their own way?