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It's different this time

“It’s different this time” are the most expensive words in investing. However, according to the chart below, this time, in terms of equity fund flows, is indeed different. In prior corrections of more than 10%, investors responded by derisking their portfolios, selling equities and rising cash until they become constructive on markets again at better valuations. Usually this selling period ends with capitulation, where investors sell what they can at any price because they cannot withstand the pain produced by losses. We haven’t seen this yet. And It would be healthy to see flows receding in the following weeks to allow valuations to adjust and become attractive again.

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Source: Deutsche Bank, daily shot.

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