As the stock market sinks to 12-year lows, stock mutual fund shareholders are calling it quits.
The Dow Jones industrial average plunged 299.64 points Monday, or 4.2%, to 6763.29, a level it first passed in January 1997. The Dow is down 22.9% this year.
Investors sold an estimated $7.1 billion in stock fund shares in the four weeks ended Feb. 18, the latest data available from the Investment Company Institute, the funds' trade organization. For the month through Feb. 26, TrimTabs.com, which tracks the funds, estimates investors pulled $33 billion from stock funds.
February's flood of sales orders would be the worst since October, when investors dumped a net $72.3 billion. Investors sold an annual record of $231 billion in stock funds last year.
The flood of selling is a sharp reversal from January, when investors bought $9 billion more than they sold, according to the ICI.
Investors called their funds Monday as the stock market fell, the fund companies say.
At the Vanguard Group, call volume was up considerably, says spokesman John Woerth. "Some modest exchange activity was reported out of equity funds and into money market funds."
At T. Rowe Price, call volume was up, as well, says company spokeswoman Heather MacDonald. "It was a mix of tax- and market-related questions — investors looking for perspective and explanations."
Individuals aren't the only ones selling, says Charles Biderman, CEO of TrimTabs.com.
"Historically, the way we know the bottom of the market is when individuals bail, but insiders and corporations buy," Biderman says.
So far, corporations are selling. Corporate stock buybacks are at their lowest point since 1997, he says. Hedge funds — the freewheeling investment pools for the very wealthy — also have been selling stocks to meet redemptions, Biderman says.
All told, investors of all stripes have pulled about $150 billion from the stock market in the past three months, Biderman says.
One bright side: Insider buying has been "well above the historic norm," says Ben Silverman, CEO of InsiderScore.com. He says the number of companies with net insider buying is about three times the number of companies with net sales.
So far, most insiders have been on the wrong side of the trade.
"When talking to corporate executives, the prevailing sentiment is that a lot of them believe their stocks are undervalued," Silverman says. "When you listen to conference calls, you feel a level of frustration that's demoralizing."