Institutions are starting to tap money market funds like an ATM machine, according to reports from the Investment Company Institute.
Assets from money market mutual funds decreased $40.84 billion -- the largest weekly dip ever -- for the week of January 2. Money market fund assets finished the week worth $2.31 trillion.
Money market assets have declined three consecutive weeks from an all-time high of $2.38 trillion on Dec. 12. Since Jan. 1999, an extra $1 trillion had been parked in the funds.
However, since its December high, $77 billion has left the funds. Of the total, institutions were responsible for moving $62 billion.
ICI spokesman James Doyle called the short downward trend the most substantial in the last two years.
But Charles Biderman, father of the liquidity theory, isn't ready to ring the bell yet for the next bull run down Wall Street. He is waiting for individual investors to make a move. "The story is that individuals have avoided the market [in 2001] and are putting their money into savings accounts," said the founder of investment research firm TrimTabs.com, based in Santa Rosa, Calif.
Biderman's liquidity theory -- price is a function of liquidity not value -- is based on the premise that there are only two things in the stock market: shares of stock and the money to buy them.
His calculation of liquidity takes into account cash flows out of U.S. equity mutual funds, newly announced cash takeovers, complete cash takeovers and new equity offerings.