The MSCI World Index has increased by about 8% year to date. The equities market showed strong resilience against several unsettling global events that included
- major civil unrest in the Middle East and North Africa (which led to higher oil prices)
- a massive earthquake in Japan
- renewed sovereign debt concerns in peripheral euro zone economies.
This surprised many bears who have been waiting short term correction for long.
I recently read a report from Legg Mason Asset Management and find an interesting comment about S&P 500 performance as below:
In our view, the market has been so surprisingly strong in the face of an onslaught of discouraging news. In a word, we believe the answer is “regret“. We think investors have finally realized they have been too negative on the stock market over the last two years, regret missing the near doubling of the S&P 500 over that time period, and have been hoping for a correction in the market to put more money to work.
That view is supported by data on mutual fund flows from The Leuthold Group, LLC, which show net inflows of US$40.5 billion into U.S. focus equity mutual funds this year through March 30. Moreover, Leuthold’s data … suggesting that investors are now more willing to “buy the dips” than they have been in previous corrections.