How can I find timely information on money flows into mutual funds? (July 10, 2000)
We look at several sources to determine this. One is Trim Tabs. That company keeps track of flows into the various types of stock funds as well as money market funds. We also track money flowing into individual stocks looking at block trades, IBD's accumulation/distribution ratings, various charting programs. We compile all of the information and come up with our view on money flowing into a particular stock.
With respect to timeliness, money flow is not necessarily an instantaneous stock mover. It can come in under quiet accumulation while the stock does not jump up. We can see money flowing into a stock for weeks (accumulation) before we see results. We love to see it, however. If we see a combination of block trades, money coming into a stock, and know there is other money on the sidelines in the market, that is a huge plus.
As we have seen, just because there is money coming into mutual funds does not mean an automatic rise. Fund managers have to be ready to put it to work (they have to by a certain time according to most fund prospectus). They may take their time, not wanting to dump all of the cash into a particular stock at once as that would drive the price higher before they could complete their purchase. Therefore, just because we see an upstart in money flow, we do not get totally jazzed. If it concurs with other solid indicators, we do get excited. It can indicate interest when nothing else is going on with a stock. It can put it over the top if everything is in gear and we see a surge in money flow. Thus, the day by day inflow of money usually does not move a stock immediately. It is one of the indicators we like to see improving or strong, but it is not THE indicator.
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