- Money is quickly pouring into the stock market as the S&P 500 trades near record highs.
- Bank of America said $602 billion had flowed into global stocks in the past five months, compared with $452 billion in 12 years.
- A rotation out of bonds and into stocks could continue to favor stocks, the bank said.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Investors have mostly shunned the stock market over the past decade even as stocks cruised to record highs, but that trend seems to finally be reversing.
More cash has flowed into stocks in the past five months than in the past 12 years, Bank of America said in a note on Friday. It said $602 billion had flowed into global stocks in five months, compared with $452 billion over 12 years.
The trend reversal could lead to further upside, Bank of America said. In the past week alone, $14.6 billion flowed into stocks, according to the note.
While investors have shunned stocks over the past decade, companies have not. The fund flows that helped drive the market higher as investors stuck with bonds were from corporations via stock buybacks, which have totaled $6.3 trillion since 2008, the note said.
But now chief investment officers rather than CEOs could drive fund flows into stocks and drive the market higher amid a rotation into stocks and out of bonds, Bank of America said.
The lack of fund flows into stocks over the past decade has served as evidence to Fundstrat’s Tom Lee that stocks are not in a bubble. In January, Lee said he didn’t see how the data “marks even the proximity of a top for equities.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.