Investors’ net purchases of stock funds in August fell from last month’s near record pace, while money moving into low-risk money market funds continue to rise amid increasing concerns about falling equity markets.
The research group Trim Tabs Financial Services Inc., which tracks industry money flows, is estimating equity funds attracted just $9 billion this month, about a third of the $26.56 billion invested in July, the third-largest monthly inflow ever.
If Trim Tabs is accurate, it would be the lowest monthly inflow since last July.
August tends to be one of the slowest months of the year for the business.
Fund groups surveyed this week by Bloomberg News said more investors were socking cash away in money funds, which are perceived as a safe harbor in volatile markets.
Vanguard Group, America’s second-biggest fund group, said its money funds attracted about $470 million in August, up from $395 million in the prior month.
While some investors are socking away cash in money funds, the average equity fund is holding less cash than anytime since this past December, according to the Investment Company Institute.
The average stock fund had just 5.6 percent of its assets in cash at the end of July. That may be a bearish sign because it means most fund managers don’t have much leftover cash to invest in the market at the same time net inflows are slowing.
Wall Street signs interpreted
If you find Wall Street lingo a bit confusing, or even intimidating, here are a few places you can consult and find out exactly what means what in the realm of stock investing:
“Wall Street Words: An Essential A to Z Guide for Today’s Investor,” By David L. Scott. Publisher; Houghton-Mifflin, $12.
A Comprehensive guide that contains definitions for nearly 4,000 financial terms.
“Wall Street Journal Guide to Understanding Money and Investing,” By Kenneth M. Morris and Alan M. Siegel. Publisher; Wall Street Journal, $14.95.
Provides both term definitions, and explanations of financial jargon.
“The Ticket Symbol Book, 1997 Edition,” Produced by Standard and Poor’s. Publisher; McGraw-Hill, $8.95.
Not exactly a definition book per se, but nevertheless very helpful when it comes to trying to find a stock listing for a company that you are interested in. Contains alphabetized list of some 10,000 companies, their stock symbols and exchanges they are bought and sold on.
For you Internet surfers, there’s Invest-o-rama at http:/ /www.investorama.com/gloss.shtml.
It’s a comprehensive stock investing dictionary that contains definitions for roughly 200 key terms.
Dow 10 strategy questioned
The Dow 10 strategy - buying the stocks with the highest dividend yields among the 30 Dow Jones Industrials - is very popular. But Dow Theory Forecasts (219-931-6480) notes that since “many companies have deemphasized dividends,” the system “may be losing some of its currency.”
The newsletter offers other strategies that, like the Dow 10, try to find undervalued, solid stocks.
For instance, the five Dow stocks with the lowest price-to-earnings ratios are General Motors, Union Carbide, AT&T, Caterpillar and J.P. Morgan & Co.
Lowest price-to-book: Morgan, International Paper, Goodyear, Chevron and Union Carbide.
Worst expected growth: Union Carbide, Exxon, Chevron, GM and AT&T. See a pattern here?
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