Whenever Ben Bernanke speaks to the media, or stocks wobble, or interest rates rise, you are seeing investors do the kneejerk.
The kneejerk is not a new dance step. It's an emotional response that indicates investors are thinking and acting short-term. In 2012, the kneejerk caused $156 billion of net cash to flee long-term U.S. equity mutual funds, according to the Investment Company Institute. In June of 2013 alone, it drove $80 billion of net cash out of long-term U.S. bond funds (mutual funds and ETFs), according to Trim Tabs Investment Research.
The kneejerk has several root causes including the tiny attention span of today's financial media, the volatility induced by hedge funds and high-frequency trading (HFT), and the fixation on interpreting every nuance of central bank policies.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
