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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
by tedsanders 9y ago
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.