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Finance, Investing, Market

Bulls running the market, but proceed with caution

Investors and traders are taking advantage of the new found confidence in stocks.

Investors and traders are taking advantage of the new found confidence in stocks.

Remember two weeks ago when stocks were dropping in the fear of falling from the fiscal cliff? Nobody dared to jump in the market and investors were holding onto their money like Adrian Peterson as he holds on to the rock while breaking NFL rushing records.

Now, after the resolution of the fiscal cliff, investors finally realize the double digit returns the market yielded last year. I suppose the fiscal cliff clouded all of our brains and we forgot all the good that had already took place along with the momentum which has been built up heading into the new year.

Fresh off of 5 year high in stocks long term equity and mutual funds enjoyed 22 billion in increased investments this week, according to Bank of America Merrill Lynch. That was the second-highest amount on record after the $22.8 billion that went into all equity funds in September 2007.

But enter the market with caution.

“I’m a little skeptical,” Art Cashin of UBS told CNBC on Friday. “I want to see if they continue.”

The fiscal cliff created a nightmare for investors and it halted investing confidence in its tracks, which in turn had a profound effect on stocks in the final month of 2012. With the congress circus of the fiscal cliff resolved, investors finally know what to expect from government regulations and can investment with more clarity.

And investing they are, by the billions.

Of that $22 billion inflow, $8.9 billion were into hedge funds, the biggest weekly influx in 12 years. Bofa/Merrill Lynch, which uses a composite from Lipper, EPFR and other services, has the data going back to 1992.

The S&P 500 jumped 13 percent in 2012, its biggest gain in three years and likely quite the eye catcher on the front page of newspapers and inside investment account statements.

Andrew Wilkes

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