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Funds exiting stocks

Date: Monday, November 2, 2009
Author: Sheila Mullin, New York Post

Investors could be rocked again Monday by sliding stocks after Friday's broad sell-off -- sparked in part by hedge funds hitting the cash register and selling stocks after a good year.

Such moves by huge hedge funds can have ripple effects, said traders.

The hedge funds want to start selling now -- while the funding liquidity and breadth in the market is good -- rather than wait for Nov. 15, which marks the traditional 45-day notice period deadline for clients wishing to head for the exits.

"It's all about beating the other guys out the door," one trader observing the hedge-fund selling told Market News International. "They don't want to be last."

Hedge funds were selling stocks and parking money in ultra-safe US treasuries, especially in short T-bills, an asset that should hold its value into the year-end even in the wildest market swings.

"Nobody wants to be carried out," said one trader.

The Dow Jones industrial average is up 10.7 percent in 2009 despite Friday's 2.5 percent slide. The S&P 500 Index is up 14.7 percent this year -- after a 2.8 percent drop on the last trading day.

And market players generally had a risk-aversion bid for treasuries going into next week's Federal Open Market Committee meeting and critical October jobs data.