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Investing: Fund flows as stock market indicator

Looking for the market's direction? Don't use fund flows.(Photo: John Foxx, Getty Images)Story HighlightsStock funds now have $5.8 trillion in assets2008-2012 longest string of fund redemptions since 1970sHave you ever driven the wrong way on a highway because you thought you'd get there faster than everyone else? Do you put your shoes on before your socks? Have you put a $20 bill into a dollar-bill changer just to prove it wrong? If so, you're not a contrarian — a bold thinker who does things differently to get better results. You're a nimrod. Real contrarians know that you make money only by going against the crowd at key inflection points. They also know that some indicators really aren't very good for measuring key inflection points. Today's Bad Contrary Indicator: mutual fund flows. In theory, when people are pulling money from stock funds, it's a good idea to buy. After all, mutual funds are for small investors, and small investors usually buy high and sell low. Aside from the annoying snobbery of this notion — most individuals handle their affairs pretty intelligently — fund flows just aren't a good indication of popular sentiment. ASK MATT: Trying to time the stock market[1]INVESTING: Follow insiders on stock buys?[2]First, let's look at the indicator. Every week, the Investment Company Institute, the mutual fund trade organization, publishes estimated long-term mutual fund flows. In this particular series, "long-term" means "stock and bond funds, excluding money market funds." The ICI breaks the flows down into several categories. We're concentrating on total stock fund flows. The ICI's calculation shows how much money has gone in or out of stock funds in a particular week, taking into account moves up or down in the funds' share prices. Since March 2009, when the Standard & Poor's 500-stock index bottomed, investors have…
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Ask Matt: What's a smart way to invest in China?

An investor gestures as he monitors the stock prices at a private securities company in Shanghai, China.(Photo: AP)Story HighlightsChinese stocks were a fad with investors in 2006 and 2007A severe downturn in the stocks and accounting issues soured investors to Chinese stocksInvestors not worried about risk can wade back inUSA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at This email address is being protected from spambots. You need JavaScript enabled to view it..Q: Are there good ways to invest in the Chinese stock market?A: Investors couldn't add Chinese stocks to their portfolios fast enough in 2006 and 2007. But since the Chinese-stock bubble burst in late 2007, many investors are afraid have become financially Sinophobic.It's understandable that investors would be afraid to get back into Chinese stocks. Pundits and TV commentators routinely told investors to jump into Chinese stocks, since the economy there was growing more rapidly than in the U.S. TRACK STOCKS: Get real-time quotes with our free Portfolio Tracker[1]Yet, the FTSE China 25 index, which tracks shares of the biggest Chinese companies, collapsed nearly 70% between the high of October 2007 to the low set in October 2008. Meanwhile, countless investigations into the accounting of some smaller Chinese companies further unnerved investors and made them wonder if the risks were worthwhile. If anything, the harrowing experience many investors had with Chinese stocks highlights the extreme risks of shares of companies in emerging nations. While emerging market stocks generate some of the highest returns of any mainstream stock asset classes, they're also among the absolute riskiest. If you're sure you can tolerate the risk of emerging market stocks, and Chinese stocks, there are several plays. The iShares FTSE China 25 ETF gives you exposure to just China. Another option is the Vanguard MSCI Emerging Markets ETF, which puts 18% of its investment…
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What to watch: Focus turns to new-home sales

A trader on the floor of the New York Stock Exchange on Thursday.(Photo: John Moore, Getty Images)Story HighlightsNew-home sales stats out FridayDecember was warmer than average, which helps salesUntil unemployment falls and wages rise, new home starts will be sluggishIt's not home-selling season yet, but Wall Street will be looking hard at Friday's new-home sales numbers.The National Association of Realtors announced Tuesday that existing home sales rose 9.2% from 2011. High Frequency Economics expects new-home sales in December will hit 400,000 on a seasonally adjusted basis, vs. a consensus of 385,000.HFE thinks home sales will beat expectations in part because they have lagged behind other indicators, such as housing starts. And, while it's hard to remember as much of the country shivers, December was warmer than average, which helps sales.TRACK STOCKS: Get real-time quotes with our free Portfolio Tracker [1]Why the focus on new homes? Because they require considerable labor to construct, which is good for the economy and the hard-hit construction sector. Rising new-home sales also mean more work for people in the raw materials and manufacturing sectors: It takes a heap of plumbing to make a house a home.The stimulus doesn't end when the for-sale sign comes down. People who buy a new home then buy stuff for it, which is good news for companies such as Home Depot and Toro.Housing has seen a slow recovery, pushed by low mortgage rates. The average 30-year, fixed-rate mortgage is 3.42%. The principal and interest payment on a $150,000 home loan is just $667, says Bankrate.com.But low rates won't do you any good unless you have a steady job, and that's one thing that's still in short supply. Until unemployment falls and wages rise, new home starts will still be sluggish.References^ https://portfoliotracker.usatoday.com/?uref=whattowatch/ (portfoliotracker.usatoday.com)...
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Super Bowl car ads opt for different curves

Kia's Super Bowl ad for the 2014 Forte features former Miss U.S.A. Alyssa Campanella(Photo: Kia)Story HighlightsAutomakers say that a fun, lively ad strategy is essentialRather than cars hugging highway curves, some auto advertisers are featuring womanly curvesMore carmakers are casting celebrities such as supermodels and TV stars in adsSpace babies who travel to Earth via rocket ship. A flamboyant, sarcastic genie who grants wacky wishes. Scantily clad babes who beguile. These are some of the silly and sexy ad themes that will take center stage on Super Bowl Sunday and not just for inexpensive, easy-to-buy mass products such as chips, beer or cola. Rather than showing cars hugging curves and accelerating up hills, a larger-than-ever group of Super Bowl automotive advertisers will be featuring womanly curves and revving up humor to promote their big-ticket machines. SUPER BOWL ADS: Join our Ad Meter panel to vote on this year's ads[1]PHOTOS: Most memorable Super Bowl car ads[2]While their products are much different — and much more expensive — than the grab-and-go soft drinks and snacks, many carmakers say that ads just as fun and lively as the ones for those products are essential for Super Bowl ad success."This is an audience that is looking to be entertained," says Michael Sprague, Kia Motors America's executive vice president of marketing and communications. "It's the Super Bowl — an ad has to be entertaining and innovative — and it's got to stand out from the others."A Kia ad for the Sorento SX Limited crossover SUV shows toddlers and baby animals rocketing to Earth from outer space. They're part of a tall tale that a father uses to answer his son's "where do babies come from?" query. The dad eventually distracts his boy by playing a kid-friendly song on the Sorento's sound system. A second Kia…
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