Where do investors tend to put their money in a bear market?

Investing, Asset Allocation
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From a logical perspective the perils of attempting to exit the market before it goes down are well documented. However, when asked: What do investors collectively tend to do during a bear market? We see that they often react by pulling money out of the market and flee to shorter term fixed instruments such as money market funds or CD’s. According to the Investment Company Fact Book, during the 2008 downturn investors withdrew $211 billion from mutual funds, while money market funds saw a net increase of $637 billion. 

Reacting during a bear market can often be detrimental to long-term portfolio growth, especially during periods like the relatively short 17-month bear market from October of 2007 to March of 2009.

March 2016