BOSTON (MarketWatch) - Investors in January showed an optometrist are coming back To The strong stock market, and particularly in large-cap U.S. equity mutual funds.

The question IS, do you follow the herd or go Against It?

According To The Investment Company Institute, The combined assets of the Nation&&9;s mutual funds rose $ 55.9 Billions in January, stock funds posting With Taking in a net $ 19.5 one billion Compared to just $ 939 Million in December. Funds That Invest Primarily in the U.S. Took in $ 11.3 Billions in new money last month, Compared to $ 12.9 Billions in outflows in December.

With the bull market Approaching icts Third year, Kurt Brouwer, chairman of Brouwer & Janachowski, says large-cap stocks With solid dividend, "as well as large tech names, Could Be Better places to invest.

Investment researcher Morningstar Inc.., Meanwhile, flows Into Estimates That long-term funds neared $ 30 Billions in January, Compared To The $ 10.6 That Moved one billion out of a month Those funds discussed earlier. And fund-tracker Lipper Inc.. tallied $ 27.3 Into one billion stock fund - EXCLUDING exchange-traded funds - making The Best month January It Had Recorded in Four Years.

The numbers do not tell The Whole Story, of course.

Historically, January Is A big month for new investment, If Only Because It Is The Time When Many long-term investors Rebalance Their portfolios, winners and culling Their produit Investing in The laggards to put back onto icts Their preferred portfolio asset allocation. Investors Who HAD Been pulling money from large-cap stocks - Which Had $ 70 trillion last year in Redemptions by Morningstar&&9;s count - Needed to flesh out Their holdings.

Another Reason For the resurgence IS Fairly Obvious derived, namely That domestic large-cap stocks are coming off Two Great Years, Meaning that enough time has Passed From The bread of 2008 For the average guy to finally feel comfortable in getting back.

Truth Be Told, however, the Numbers Suggest thats the average investor ready to make WAS That Move a year ago, as fund flow Were On The Increase at That Time, only to see investors back away from The Market after the "flash crash" in May. The stock market&&9;s strong close to the Year Appears To Have Overcome Those related concerns.

"People really Seem To Be Their confidence back in getting funds; They Seem To Be Getting Over The hangover from 2008," Said Matt Lemieux, research analyst for Lipper."And When You Put The Middle East has little contagion Scaring people away from emerging markets funds now, one place Many of Them feel confident right now IS With long-term, domestic funds saving account pay day loan."

Lemieux Noted That There Is a Disconnect Between the investors using funds and traditional Those trading in ETFs, has split That Was particularly noticeable in January, WHERE WAS money flowing Into Long-term funds flowing out of order ETFs To The Tune of $ 6 trillion.

"There&&9;s a Difference Between Conventional How the mutual fund investor Reacts to the news," Lemieux said. "They&&9;re not you&&9;re Focused What is happening right now today gold, and They Are Much More about What They Can Get Comfortable With and buy and hold."

When investors are comfortable Enough to buy something, Cdn That Actually Be a Bad Sign.Morningstar has a measure Called "investor returns" Which shows What investors really get out of funds, is based When the money flows in and out. Historically, investors do Significantly Worse Than The funds THEY buy, Because THEY Often buy-in at the top of the Market. Then hold onto Typically Shareholders The Fund while it falls out of favor, and come away disappointed, HAVING Bought High and Sold Low.

That lousy record is "More than a year observation case, though, so I would not Directly make investment decisions based timing is What investors are doing," Said Stephen Savage, editor of the No-Load Fund Analyst newsletter.

"That Said, I Would Consider It Along With The Overall Economic backdrop," he Added. "That Is That backdrop we&&9;ve got long-term headwinds to growth. So, Given The Known Risks and The Possibility for more wild cards - and with Equity valuations Think That We Are not cheap - it makes sense for investors to Be Cautious.The Fact That Their brethren are not [Cautious] That Should Reinforce message. "

Investors Become a statistic for a lot of reason, and plenty of people CAN find good logic for Adding to Their equity holdings and domestic large-cap issues now. That Said, the Numbers "should serve as a reminder aussi That It&&9;s Hard To Make Money in the long haul by The Crowd followings.

Before joining the herd, investors Would Be well-served to see if They Might Better Their diversify portfolio by going in a different direction.

Chuck Jaffe: Herd mentality steers investors to large-cap funds