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Re:When Will the Tech Bubble Burst? by adventured on Sunday August 06, 2017 @12:59AM (#14939768)
> so net cash flow into the market is zero

That's incorrect. New capital flows into or out of the market constantly. Very frequently the market sees immense net cash flow in, for example typically toward the end of an expansion and just before the next recession or crash. Joe & Jane investor tend to be very late to the party, especially after getting burned badly by the last two asset bubble parties, they joined this one quite late into the expansion.

Large amounts of capital - trillions of dollars in the US alone - are essentially always sitting on sidelines, sometimes more of it moves into the market, sometimes more of it moves to 'safety' and out of the market. You can track these capital in and out flows, it's mostly public information.

For example, this huge burst after the election:

"A whopping $63 billion has poured into U.S. stock funds since Donald Trump won the presidential election, according to the latest tally by Bank of America Merrill Lynch. ... Investors have yanked $37 billion from bond funds since the election. Most of that money rotated right into stock funds. This "great rotation" could be a major story in 2017."

http://money.cnn.com/2016/12/19/investing/investors-pour-63-...

Re:When Will the Tech Bubble Burst? by tedsanders on Sunday August 06, 2017 @01:41AM (#14939929)
To be clear, after the headline, the first line of the article says that $63B went into stock funds (as opposed to stocks).

To make this more concrete, let's imagine how this actually happens. Joe & Jane send $10 to a stock fund. The fund places a market order to buy stock. The market matches the buy order with the lowest sell offer. The fund sends the money to the seller, and the seller sends the stock to the buyer. At the end of the transaction, both the amount of money is conserved (J&J are down $10, but the seller is up $10) and the amount of stock is conserved (J&J have one additional share and the seller is down one share). Money did not move "into" the market. On the opposite side of every buy, there is a sell. For every dollar that J&J sink into the market, sellers are pulling exactly that many dollars out.

As the article you link says, there can be net inflows into stock funds. But that's only possible because there are entities besides stock funds that have equal and opposite outflows. In aggregate, buying stock cannot put money into the market because every purchase is also a sale.