Destroying The "But Everyone's So Negative, Stocks Can't Drop" Meme In One Chart

Tyler Durden's picture

Day in, day out, we hear it... It's "the most unloved rally"; Stocks are in "the Rodney Dangerfield rally"; there's still all the "money on the sidelines." Well, it seems, judging by Investors Intelligence surveys of those "not bullish" (bearish or expecting a correction), that investors have never (ever) been more lovingly, respectfully, all-in with this rally... (but that's just the facts speaking - not the asset-gathering, always stay long, commission-snatching soundbites).


Investors have never been less bearish or expectant of a correction.

Via Cliff Asness,

Every time someone says, “There is a lot of cash on the sidelines,” a tiny part of my soul dies. There are no sidelines. Those saying this seem to envision a seller of stocks moving her money to cash and awaiting a chance to return. But they always ignore that this seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines.

If you want to save those who say this, I can think of two ways.


First, they really just mean that sentiment is negative but people are waiting to buy. If sentiment turns, it won’t move any cash off the sidelines because, again, that just can’t happen, but it can mean prices will rise because more people will be trying to get off the nonexistent sidelines than on.


Second, over the long term, there really are sidelines in the sense that new shares can be created or destroyed (net issuance), and that may well be a function of investor sentiment.


But even though I’ve thrown people who use this phrase a lifeline, I believe that they really do think there are sidelines.

There aren’t. Like any equilibrium concept (a powerful way of thinking that is amazingly underused), there can be a sideline for any subset of investors, but someone else has to be doing the opposite.

Add us all up and there are no sidelines.


h/t @Not_Jim_Cramer

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dcohen's picture

If they keep dividing every dollar they divide there will always be money on the sidelines, in fact there will be infinite money sloshing around, but still limited resources.

TeamDepends's picture
Last week I told my psychiatrist, "I keep thinking about suicide." He told me from now on I have to pay in advance.


max2205's picture

My Dr said I have 3 months to live so I didn't pay the bill.

He just said I have 3 years to live

NOTaREALmerican's picture

Well,  it's totally different this time.  

Until somebody big doesn't get paid (eg bailed out by the peasants) asset prices go:  To the moon, Alice.   To the moon!!

Goldilocks's picture

...whatevs.  they'll get,

smoked like they ain't no thang.

Pure Evil's picture

Oddball: Always with the negative waves Moriarty, always with the negative waves.

Oddball: Why don't you knock it off with them negative waves? Why don't you dig how beautiful it is out here? Why don't you say something righteous and hopeful for a change?

Moriarty: Crap!


Negative Waves

FieldingMellish's picture

Great film and it wasn't dollars they were going after.

taketheredpill's picture



You get the flip side in Bond sentiment. Using JPM Bonds survey and making the index = (% Long + % Neutral ) / (% Short + % Neutral).  This index says bonds are as "unloved" as in May 2006.



Racer's picture


I wonder if these top 8 are same top 8 exploratory traders?



And they are half the volume in certain contracts"

Salah's picture

Choomboy's world is coming unraveled by the hour....everything, you name it: foreign policy, established doctrines & relations, credabilty, congressional relations (what's left), etc. etc. ...the guy is a walking-talking fountain of chaos. 

Sooner or later this cascade of chaos has to affect global markets.  Latest on Mosul:

Pure Evil's picture

The question then becomes will the Pratorian Guard (SS, NSA, CIA, DHS, TSA, State and Local Police Departments) along with the military declare open warfare on the American people to save his bath house butt?

GeoffreyT's picture

Washington himself led the military to crush the Whiskey Rebellion; Macarthur led a cavalry charge against the Bonus Army (after having them gassed with lewisite); the National Guard opened fire at Kent State; the pigs dropped a firebomb on MOVE and burnt an entire city block to the ground, killing men, women and children (most of whom were not part of MOVE); Lon Horiuchi and the rest of the pig sociopath trigger-men 'lit up' Waco and Ruby Ridge.

So why is there even a question? What gives you the slightest impression that the public should expect mercy from the order-following high-school dropouts who are specifically selected for stupidity and obedience, and who SCOTUS declared have no positive duty to protect us, but only a general duty to enforce the law as decreed by their opverlords? (The relevant case cites: South v. Maryland, 59 U.S. 396 [1856]; reaffirmed in, inter alia, Warren v. District of Columbia 444 A.2d. 1, DC Court of Appeal [1981]).

Implied Violins's picture

He may very well try, but THIS time there is actually a much, MUCH larger number of people who are awake - including some who are in positions of power (and former military), just waiting for the right time to step up.  Just look around and see how many alternative news websites are posting informative commentary about our hijacked government.  There are a lot of insiders who are leaking information.  I believe if there were a crisis here at home, there would be some trying times - but in the end, there would be positive changes.  Too many people know too much now to take much more of what is going on in Washington, and I bet many of those who would be asked to aim guns at us will turn them where they belong when push comes to shove...or at least, when their first paycheck bounces.

Alananda's picture

As intended, me thinks.  Mission nearly accomplished.  In which South American country has Oboom! chosen to purchase 40K acres and a small army to protect the perimeter?  North Carolina, according to one.

alfred b.'s picture


     The 'money on the sideline' has been benched for the season...or the next 'reboot'.


P-Mack's picture

There IS money on the sidelines. But the capital driving this rally is coming from other markets.

It is a global ecomony. Look at the relative performance of other markets and it will make more sense. The US market is not a fish bowl.

And the argument that the "seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines" is not always a fair representation of cash on the sidelines because it ignores money flow / volumes. Prices can be bid up on low volume. Just because it's rallying, doesn't mean it's rallying on volume.

This is not the case at the moment as volumes in the US have been realtively healthy.... but that does not mean it can't be the case in other instances. So this argument is wrong and can be proven so.



tryinsohard's picture

I disagree.  There is a sideline and it is the amount of stock purchased on margin.  We're all in. 

Cashcollateral's picture

God, this guy again.

Saying there are no sidelines makes an assumption that there is a fixed amount of money in the stockmarket at any one time, and that it is impossible to generate money OUTSIDE of the stockmarket to put it in.

I am gainfully employed and fortunate enough to be able to save money. I keep my money ON THE SIDELINES waiting for opportunities to invest. My money that sits ON THE SIDELINES is what I earn from my salary. I didn't get it from the stockmarket. Putting it into the stockmarket is a capital inflow and will raise the aggregate price of assets. This is like capital markets 101.

Jesus, seems like any idiot can be a fund manager.

P-Mack's picture

Anyone can also be a "quantitative financial theorist" by the looks, given that's what he also refers to himself as.

This guy is not a quant. You can't be that dumb and call yourself a quant. 

2 degrees, an MBA and a PhD... haha. Back to basics buddy...

moneybots's picture

"Every time someone says, “There is a lot of cash on the sidelines,” a tiny part of my soul dies."


Moving into the top, it is the insiders who are putting a lot of "cash on the sidelines", waiting for the bag holders to put their cash back on the sidelines at the bottom.

P-Mack's picture

The performance of his funds is SHIT. No surprises here.

Leboob's picture

I'd say! And his fees are through the roof. What a joker.

Of course, ZH posts have always been good for stimulating thought but terrible if you want to make any money.

Spungo's picture

If you factor in the 1-2% expense ratio, it becomes obvious that only a complete moron would buy mutual funds. You could retire rich just by buying and selling SPY and QQQ at the right time. Very few managed funds outperform the index, and it's actually against the law for mutual funds to short stocks. This is why hedge funds tend to do well during bear markets but mutual funds get destroyed.

P-Mack's picture

It's obvious that his arguments are against a market that got away from him.

He's arguing with the market... the market is always right. 

He fucked up. He's trrying to justify it.


3 different ways of saying the same thing. Ha-HAH!


deflator's picture

Well, it seems, judging by Investors Intelligence surveys 


What I am hearing is equities will continue to go up because there isn't anything else that can be(safely) invested in. (sentence ended in preposition was not mine) I blame it on the FED!

orangegeek's picture

Yellen keeps stuffing the markets with print, but wealth isn't flowing through the economy.


The economy is in the tank, but the markets are bid up almost everyday.


So now we are detached.


All  done to justify the Fed's existence and feed a few billion to each of her friends.


We have a communist in the WH - the rest rolls down hill from there.