Mutual fund investors and the dollar

Approximately 95 percent of investors and traders identify themselves as contrarians. An equally approximate and complementary 5 percent actually comport themselves in a contrarian manner.

Have you yet to hear a self-important financial swami get up on television and declare, “Yeah, I run with the herd. Get a hunch, buy a bunch — you know the drill: I buy when everyone else is buying and sell when everyone else is selling. How else do you propose I keep a 1-percent management fee on other people’s money?”

Even more remarkable are the number of services who sell information based on the premise your fellow human beings are dolts. These include private sentiment surveys, brokerages tallying up their clients’ positions, and even official readings such as the Commodity Futures Trading Commission’s weekly Commitments of Traders (COT) reports.

The Investment Company Institute (ICI) collects data on flows into and out of mutual funds. Similar data exist for exchange-traded funds (ETFs), but as the mutual fund data have a longer history and are not changing as rapidly as the ETF data, we will confine ourselves to the mutual fund flows below.