After binge, individual investors less bullish on stocksFebruary 7, 2013: 10:53 AM ET
Individual investors continued to put money into the stock market last week, but the pace has slowed.
U.S. stock mutual funds, a popular investment vehicle for individuals, brought in just over $3.5 billion in the final week of January, according to the Investment Company Institute. That's about $30 million more than the week prior, when flows started to moderate.
Overall, investors have poured $10.3 billion into U.S. stock mutual funds in January.
That's a significant shift from the long-term trend. Since 2009, individual investors have pulled more than $150 billion a year out of U.S. stock mutual funds. But the latest data suggest that investors are being drawn back into the market as stocks rise near record highs.
While it's still early, there are signs the new-found enthusiasm may be fleeting. After a record surge of $7.7 billion in the first full week of January, the amount of money flowing into U.S. stock mutual funds has ebbed.
That could be a prudent move for a class of investors that is often derided on Wall Street for poor market timing.
U.S. stocks staged a strong rally in January, with the Dow posting its best performance for that month in nearly 20 years. The Dow and S&P 500 are both at their highest levels since 2007, and within range of new all-time highs.
After such a big gain, it's unclear how much higher stocks can run. Some analysts say the latest rally is a sign hat the bull market is in its final throes.
Meanwhile, corporate insiders, such as executives and board members, have been bailing out of the market. Insiders were nine times more likely to sell shares of their companies than buy new ones last week, according to a report released Wednesday.
In an interesting twist, the amount of money flowing into mutual funds that invest in overseas stock markets increased sharply last week. According to ICI, world equity mutual funds had an inflow of $4.6 billion, up from $2.8 billion the week before.
For the month of January, individuals put more than $16.9 billion into world equity mutual funds, outpacing the build in domestic funds.
As stocks find favor, individual investors have been decreasing their exposure to bonds.
Bond mutual funds, including those that invest in taxable and municipal fixed-income assets, had a combined inflow of $3.5 billion last week, according to ICI. That's less than half the previous week's inflow and down from $7 billion in the first full week of January.
Hybrid funds, which offer a mix of stocks and bonds, had an inflow of $2.6 billion last week, up from $1.9 billion the week before.