It’s called jumping from the frying fan into the fire.

Based on my experience as a co-founder of a mutual fund group, I can tell you that if there is one sure thing in this world, it’s that when investors rush en masse into an investment category, it is invariably at almost exactly the wrong time to do so. Is that the case with today’s rush into bonds?

To shed some light on that point, Casey Research Switzerland-based editor Kevin Brekke volunteered to look into the correlation between bond flows and performance. Here’s his report…

The Business Insider posted a story on Yahoo! Finance today that is somewhat surprising. They are quoting a Thomson Reuters analysis of the 30 largest fundamental hedge funds has found that these major players slashed their risk exposure to the stock market in the second quarter, by opting for defensive stocks such as dividend-payers or utilities, or by shifting away from cyclical industries such as materials and energy.

The article goes on to say, "You're not in that investment mindset of a few years ago any more, and a lot of risk has been taken off the table already," said Steve Goldman, senior market strategist at Weeden & Co in Greenwich, Connecticut. "The consumer is in dire straits, the economy's resilience has been disappointing, and everybody's bracing for it."

This of course isn't news to our readers, but we've been encouraging all of us to take note of how negative and "dire" the current financial news headlines have become---for some odd reason or motive. The point of the article quoted above is summarized in their own words below:

Bad news matters and so does good news, when it comes to the direction of stock prices. So do the intentions and operations of the market mover and "specialists", who are also called "market makers".

But what makes a stock "cheap" or "under-valued"? In the past it had something to do with the ratio between the current price of the stock and the earnings of the company that the stock represented.

An article on today's Yahoo! Finance site referred to an article in the Wall Street Journal titled, "The Decline of the P/E Ratio" and it makes some great points and begs some important questions.