SPDR Gold Trust (ETF) (GLD), S&P 500 (.INX): The Big Surprise in the Great Rotation Into U.S. Stocks

The big losses in many inverse stock ETFs makes outflows logical, but leveraged bullish ETFs have posted amazing returns. ProShares Ultra S&P500 (ETF) (NYSEARCA:SSO), for instance, has posted more than double the rise of the unleveraged S&P 500 (INDEXSP:.INX) so far this year. Nevertheless, short-term traders are apparently satisfied to cash in their profits and take less aggressive positions going forward.

Finally, income-oriented funds in the real-estate and preferred-stock areas have seen outflows. This actually is most consistent with the original great-rotation theory, as these types of investments often behave in line with the bond market. With losses having come from rising interest rates, investors who believe rates will keep going up are selling to avoid further declines down the road.

Will the Great Rotation continue?
As long as macroeconomic conditions keep pointing toward a healthier recovery, it’s likely that the same trend toward U.S. stocks and away from these other investments is likely to continue. Bonds might well follow suit as well and eventually provide even more inflows to the stock market, and as long as stocks keep attracting capital, it’s possible for the bull market in stocks to continue well into its fifth year.

The article The Big Surprise in the Great Rotation Into U.S. Stocks originally appeared on Fool.com is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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