A River Runs Through It
According to an Investment Company Institute (ICI) press release, this summer we will celebrate the 100th anniversary of the mutual fund. To be exact, America’s first mutual fund, Massachusetts Investors Trust, commenced operations on July 15, 1924. ICI writes “Mutual funds and their fellow products are the greatest democratizing force in the investing world…more than 120 million Americans rely on registered investment funds to pursue their financial goals.” Further along in the release, ICI made this statement: “the mutual fund’s success is a cornerstone of the American dream – that’s worth celebrating.” I second that statement!
Norman McLean, the author of one of my favorite books (and the title of this blog), graduated from Dartmouth College in 1924. His novel “A River Runs Through It”, is a compelling and well written story, and a darn good instructional guide to fly fishing. His prose captivates the reader. McLean writes about fishing in Montana’s rivers and streams, and the challenges of fishing and of life.
This summer I will enjoy fishing some of Montana’s finest rivers, although probably not the Big Blackfoot, the river in McLean’s story. I’ll fish the Beaverhead, the Missouri, the Big Hole, and if I’m lucky I will fish the Madison during the salmon fly hatch. All of these rivers flow through gorgeous wilderness and contain many large trout, which attract fly fishermen and women, yet each river has certain characteristics that one must learn if you wish to float or wade them successfully. If you want to get better, you always learn when you fish. And some days you learn patience.
A second ICI press release on my desk dated February 14 provides details on long-term mutual fund flows, the inflow and outflow of cash into the capital markets. ICI is the official keeper of fund flow data and captures this valuable information. Equity (stock) mutual fund flows continue to experience outflows in 2024 while bond fund flows have been positive (inflows). In January, many attributed this fact to “rebalancing” following a strong year in the stock market. Others remarked that equity outflows demonstrate skepticism regarding the strength of the bull market. We know from experience that different viewpoints produce different outlooks. If you want to be a better investor, you observe critical data like fund flows and develop your own viewpoint.
Seasonal differences cause changes to the flow of rivers. Spring run-off muddies up the river, often making it unfishable. Irrigation season, when water is pumped out of the rivers to nourish crops, impacts the flow and can raise the water temperature. Various sections of the river are impacted differently by these changes. Understanding these impacts can improve your outcome. And who doesn’t want to catch more fish?
This summer, when we celebrate the 100th anniversary of the mutual fund, I encourage you to be a student of the market. Maybe you will observe fund flows, shape some ideas on the impact of interest rate changes, or develop some other viewpoint that improves your investment prowess. It can be a rewarding experience.
This summer, if you go fishing, I encourage you to observe the river’s flow; the riffles, runs, and pools that make up the dynamics of a river. Gauge the temperature, observe water clarity, and don’t forget to be careful where you wade. Most importantly, later in the summer I’d suggest you carry an ample supply of grasshopper flies. When a trout rises to eat your grasshopper, it is about as exciting and rewarding as it gets.
Ralph McDevittFebruary 21, 2024
Any opinions are those of Ralph McDevitt and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results. Raymond James & Associates, Inc., member New York Stock Exchange/SIPC
