In the world of investing, we often hear it said that people are putting their money into stocks, bonds, gold, land, and so forth. The use of the expression “putting into” is clearly a dead metaphor. I suppose a miser who buries his money could be said to be putting his money into land in a literal sense, but the other investments defy any such literal interpretation. We understand the expression to be figurative for buying. Similar consideration applies to the opposite expressions, “taking out of” or “pulling out of,” which are figurative for selling.
Thus, a man who buys a lot of stock may be said to be putting his money into the stock market, while a man who sells a lot of stock may be said to be pulling his money out of the stock market. But what is merely a figure of speech when speaking of individuals becomes downright peculiar when it is said of investors generally, as is the case in a CNBC article published today: “Investors pulled the most money out of stocks last week in two and a half years ….” In this case, we cannot simply construe this as meaning that investors sold a lot of stock last week, because for every seller there is a buyer; from which it would follow that investors bought a lot of stock last week. And if we further translate into the corresponding dead metaphor, we would conclude that investors put a lot of money into the market.
Just as there is no problem speaking of individuals putting money into or pulling money out of the stock market, so too is there no problem comparing one type of investor with another, retail versus institutional, dumb money versus smart money, workers versus retirees, and so forth. But with investors as a whole, something is amiss. The article also speaks of money rotating from one type of investment to another: “After such a big move, it would only be natural for investors to start shifting money around as allocations get out of whack with too much allocation to risk.” While an individual or type of investor can sell this and buy that, the trades will be offset by those who buy this and sell that. No matter how much money is “pulled out of” one type of investment and “put into” another, exactly the same amount is “put into” the first and “pulled out of” the second (less commissions, of course). In short, money does not literally go into an investment. It only changes hands, going from one bank account to another: from the buyer’s bank account to the seller’s bank account, with a little into the bank account of the broker.
This, by the way, ties in to another peculiar remark heard from time to time. And that is that the reason all the money being printed by the Federal Reserve has not produced any inflation is that all the money has gone into the stock market. But as already noted, no matter how much money “goes into the stock market,” the exact same amount “comes right back out.” In other words, when people buy stock, other people sell it to them, and the total amount of money in circulation remains the same; because it mostly just goes from one bank account or money market fund to another.
Presumably what is intended in all this is that the price that will clear the market on one day is different from the price that will clear it on another. Therefore, instead of saying that people pulled their money out of the stock market last week, we could say that the price at which willing sellers could find willing buyers was lower last week than previously. Or, we could just say that the stock market went down.
So why don’t we say that? I suspect this another one of those circumlocutions by which we try to reassure ourselves. First of all, simply saying, “The stock market went down last week,” as if it were just a brute fact, would make it sound as though the movements of the market were just a matter of chance, and that we were at the mercy of irrational forces. But if the movement is accompanied by a reason, such as “owing to profit taking,” or “on account of the jobs report,” or “because investors are increasing their cash allocation,” we are reassured that the market is rational and that there is a reason for everything. Moreover, the people who supply such reasons are presumed to deserve our respect and admiration. Second, when we say that people pulled their money out of the stock market last week, it sounds as though they still have their money, and all is well. If we just say the stock market went down last week, it sounds as though people lost money, and all is not well.