Don't Get Caught in the Rip Tide

If you look at net inflows and outflows for equity mutual funds, you almost always see the same story being told. Traders get caught up in what has just finished happening. They pour money into stocks only after big run-ups, and then they pull it out following significant declines.

The charts below illustrate the principle nicely. It took a 6%-to-7% decline in May and June before people got worried enough to cash out of stocks. Then the Dow recovery to a new all-time high, on Aug. 2, triggered massive inflows at already-inflated prices....283 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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