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Forget Barton Biggs, David Rosenberg Has The Truth On Sideline Cash
The money-on-the-sidelines argument has reached deafening and self-confirming as anchoring bias among any and every swollen long-only manager seems to have made them ignore the realities of the situation. David Rosenberg, of Gluskin Sheff to the rescue with good old fashioned facts - as much as they might disappoint the audience. Barton Biggs quote in the USA Today article points out how bullish he is and how cash levels are very high and "idled money is ready to be put to work". However, as Rosie points out equity fund cash ratios are at a de minimus 3.6%, the same level as in the fall of 2007 and near its lowest level ever. The time when cash was heavy and 'ample' was at the market lows in 2009 when the ratio was very close to 6%. Bond fund managers, it should be noted this includes the exuberant HY funds, are now sitting on less than 2% cash so if retail inflows continue to subside as they did this week, buying power could weaken over the near-term. What David points out that is more interesting perhaps is the converse of most people's contrarian dumb money perspective - the household sector appears to have used the rally of the past three years, for the most part, to diversify out of the equity market (getting out at price levels they could only dream of seeing again). As we have pointed out again and again, the retail investor has been a net redeemer in equity funds for nine-months running and has been rebalancing since the March 2009 lows in a clearly demographic shift towards income strategies as the memory of two bursting bubbles within seven years is seared into most private investors' minds.
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All that sidelined money has gone into APPLE!
iNeedLiquidity
I laughed at this more than I probably should have.
Retail money has been absent since Oct. 2008.
Proof the market is rigged:
US Treasuries are worth ANYTHING.
Gold ISN'T $5000/oz yet.
Golly gee that must be why the M2 money velocity is 1.597, an all time low, its ready to go!
Sure, the Itoaster will tripple their earnings!
Whats a Barton Biggs? Why is it always the same recycled ass clowns? I was at a meeting in 2000 when "Dr. Bob Froelich" or whatever from Putnam was speaking and proclaiming the markets were just getting warmed up. There was this George Bush reading kiddie books moment when someone interrupted him to tell him the market was crashing. The talk ended awkwardly and the market crashed from there. I still see this shmuck on MSM all the time....
My money isn't in stocks and it won't be until the Republicans and Democrats are throw into the fire pit and there is a free market again.
Is all this supposed to happen in our life time?
Hate to tell you this, but FRNs will also be roasting in that pit with them. Can't have corrupt money without corrupt "leaders," and, the USD is surely corrupt (pure fiat).
Advice: Ensure that your "money" isn't linked to FRNs.
So I walked into my local ice cream shop and ordered the "recovery sundae".......it was made up of the following.....
2 scoops of an economic ROCKY ROAD
Large amount of congressional NUTS
SPRINKLES of delusion
And lots and lots of BLS FUDGE.........
yummy.........
I had one of those
but they called it a "Banana Republic"
And a silver spoon!
Exactly what I posted yesterday.............doesn't take a rocket scientist.
After getting SHELLED 2x's and losing 20-40%, folks have learned the game, and they are of the age now that there aren't enough years left to get RAPED again.
OUT for good.
May I ask? Why are you here if you're out of the market for good?
Shirley you jest......
Me JEST? , You KITO ,, Please stop calling me Shirley.
Check your logic. (it should be clear why he doesn't have to respond)
Does truth matter?
When it's to late
It is going to be fun to watch these money managers get creamed in the future. When the music stops the chairs fill up fast. There is one thing that I am sure will take down the market in the near future and that is the same thing that brought it up - GREED.
the ONLY way to win is to not play
My counter to the stupid Lotto ads was: You Can't Lose If You Don't Play.
Up or down, i'm glad my money is in silver annd gold. Fuck the rest.
it may be sooner than later, with that call, best buying opportunity in a lifetime. reminded me of 07 when the imf was raisng their world growth forcast, or in 01 when abby cohen said this was a great buying opp for tech.
Seriously, how long has every tool over at the BlowHorn [CNBC] been pimping this "money on the sidelines" crap? Just another in a very, very long line of false or made up equity catalysts that are supposed to inspire Joe Six Pack to buy stocks:
Santa Rally...January Effect...options expiry...Mutual Fund Monday...Global Growth...Bond Fund Redistribution...window dressing...stock buybacks...on and on. As the ICI continues to report, NO ONE HAS FAITH IN THE CLEARLY BROKEN EQUITY MARKET ANYMORE! It is all just laughable. Equities simply cannot stand on their own...and have not been able to stand on their own for more than a decade now.
Someday, the criminal syndicate known as Wall Street will become interested in restoring its clearly broken credibility. But not today!
The sidelines is actually the horizon.... Funny thing about the horizon... You can walk, ride or fly to it, it won't come any closer..l.
like the pot of gold at the end of a rainbow?
imagine falling off a cliff
looking back up at the edge, it's not that far away, and is receding at an accelerating rate
if we consider the ground as some 'horizon', it is getting very close, very fast...
slewie, you are a poet - wish I had some point to fight with you but I never find it...
siver, gold and cheap clean rental housing.....wealth preservation in a nutshell.
The salvation army... First and last line of defense of the United States!
And how are you going to obtain food from me? Careful about making the assumption that you'll be able to buy essentials (which everyone else NEEDS).
But... yes, as a vehicle to "get there," this can be good advice (I applied it). Wealth itself is meaningless unless you do something with it.
If THEY destry the tax advantages of rental housing, they further destroy the market. Can't see it happ'ning.
Fool me once, shame on me, fool me more than once, not gonna happen.
Well we need to print some money and put it on the sidelines....again.
"Excuse me, I have those pallets of Federal Reserve Notes, where do you want me to stack em"
Idle money is waiting for the inevitable market crash. Then you'll see a purchasing spree. As long as the market is going up, the money will remain on the sidelines.
"Then you'll see a purchasing spree."
And the inflation floodgates will open up...
Spend FRNs now!
When the retail investor comes back to the market, AAPL will go to $3,000 per share
Which will also be the price of an iPod...
When the total amount of dollars has doubled of course there is more on the sidelines. Also when money is sitting on the sidelines it isn't gathering dust. It is being used either as reserves or investments.
"It is being used either as reserves or investments."
Or... it's being used to fill grave sites. All the "extra" dollars are being used to fill the holes in the banks' books: and the dead won't be disturbed- lots of dead presidents in their final resting place.
The other arguement is all that idle cash is in the bond markets and the coming rise in
interest rates will precipitate a bond sell-off in favor of shifting into what has been working - equities, of course.
Yep - 58 years old myself. Burned in 1999-2000 and a little in 2007-2008. I have enough to retire and my cash is staying in cash and some bonds.
Let the wall street boys find some younger fools to fleece.
.
Oh wait - the young have no money or jobs because the banks and wall street boys killed the economy.
"Oh wait - the young have no money or jobs because the banks and wall street boys killed the economy."
Obama will forgive their debts, no worries.
They don't have a great deal of debt, because no one will lend them any money.
Not exactly. The central banks around the world will call the CDS "even" and vaporize the obligations that they owe each other. Now everyone else will still have to pay their debts while the banks and their governments outlaw transactions in gold and silver while simultaneously re-valuing it much higher. All fiats will crash making paying any debt and still buying food/fuel impossible. this has happened many times before. Got physical? You fucking better.
Of course, if a deleverging continues and debts are not expunged but have to be repaid, and det repayment will need to occur in the currency of the debt, ie. US dollar denominated debt has to be paid back in US dollars, then there will be a shortage of dollars as everyone will need these to repay their debts. Looks like the dollar may rally versus other fiat currencies and possibly gold. A dollar rally, at least against other fiat currencies would be a nightmare for the Fred.
" I have enough to retire and my cash is staying in cash and some bonds."
Man, I'm "Seer" and I can't even predict how much will be needed to "retire." WOW, you're good!
How are you situated should hyperinflation hit?
Only morons would buy ath these levels and or FEDster backstoped leeches!!! Until next Friday this shit market will either go sideways or move a little higher then....use your imagination ...this has been a long time coming...as in 3 years long and counting!!!
what happens next friday
After the crash of 2000, 9-11-2001, the crash of 2008, the flash crash. It could take a generation to get people back into the Market.
Retirees are not getting an income on their savings so they have to liquidate stocks to live on. People without Jobs are tapping their 401Ks to live on. That Money is spent on everyday living expenses and is not comming back into the Market.
With people getting part time Jobs are not putting money into 401Ks. The people that are getting jobs paying substancially less than they made before are not contributing to 401Ks as they need the Money to live on.
So where is this Money to spike the Market higher going to come from?
The money comes from where it always has come from for the past 99 years, the Federal Reserve. It's their job. It's no secret, it's their mandate. It doesn't replace your or my lost money in the market, but it does re liquify the big boys' accounts. I don't like it, but that's the way it is.
Yes, but...
The entire paradigm is based on growth, and despite what some might think, you can't print growth! Somewhere along the line these people won't be able to hide physical reality.
Basically what they are saying is that without NEW MONEY the Market cannot hold the current levels.
They may pump it temporarly but without NEW MONEY the Market cannot hold at this level.
"If they're going to die, they'd better do it and remove the surplus population!"
Martin Armstrong who is a far better analyst than the people mentioned above chimes on all the cash on sideline and makes a bold statement that market will never crash under such circumstances. The stock market is going to go higher for the same reason that S&P500 companies are making record profits: US companies sell abroad and outside money is going to pour into US markets driven by nothing new----capital flows. Further, with no yield outside of stock dividend income all that fixed income money will find richer home in the stock market.
By capital flows, Martin Armstrong is not referring to liquidity ratio of US Equity Funds. That's rather silly. And probably meaningless.
Since when did the retail investors outsmart professional, anyways?
It's ALL about "confidence." Stock markets WILL crash, and they WILL terminate at some point; this is actual natural law- ALL growth eventually ends.
There's an appearance of activity that's primarily driven by consolidations, which happens with/during contractionary periods. I'm guessing that Armstrong is basing his "forecast" on previous cycles. Well, sorry, this isn't your father's business cycle anymore. Look around, the consumer base, the one that provides markets with their energy, is in decline (go ahead, name where there's ANY meaningful consumption growth)- can't push on a string.
Great Bernank stimulates doomsday economy.
Persistent retail outflows lead Mom and Pop to record purchases of guns ammo and storable food.
Pay attn! March will go out like lamb as the Wall St. cabal puts the final touches of lipstick on the aging pig of US equities. April will feature the iPocalypse luau which will bury then roast the pig.
Will any of the zealot gloomers here ever admit that the "shills" were right? The money on the sidelines, whether produced out of thin air or not, DID enter the market in the past 5 months, and rallied it almost 30% (more for some indicies, less for others). Staring us right in the face is the reality of huge rally, and that fact is consistently denied by an unthinking, emotional den of bears.
that would actually require volume to go up. The past 3 months of the market has looked like a straight line moving uo at a 45 degree incline. it is 100% contrived and created by HFT algos pumping stocks with borrowed money.
Or maybe you believe a stock like Priceline should rise 50% in three months with 80% slower growth forecasted.
The stocks sold to the sidelines has been money market funds where Boomers are using it to SURVIVE.
Do remember that cash actually yielded something in 2007. ZIRP is pushing cash into other assets in a disparate search for yield.
Well, one can always argue that cash balances in equity funds is a small subset of dry powder.. And that there is a lot more parked in bond funds that can find its way back into riskier assets, particularly on a reallocation ramp by pensions and insurance companies.. Without making a comment as to whether that would be wise on their part, flow of funds is a powerful thing and can drive assets to levels very far from reasonable for a while
I'd love to invest my cash in the stock market and watch it double. But every day could be the last at my job. Any company can go bankrupt any day, the record corporate cash is complete BS. A fantasy created by corporate accountants.
Anybody under 40 with any cash at all isn't going to risk their savings because they know they will need it when they lose their job. Talk to any young person, there is no job security. They expect to change jobs every other year. People in their 30s have dropped 401k plans because job security is gone and rollovers are a bitch. They have also seen two major crashes within a short career with 0% net investment growth.
The only retail investers left are daytraders that think they can outsmart the algos. They may be up now but 90% of them will lose evrything with one accounting scandal sending a momo darling down 90% in a day.
Then you have the IPO babies made with Daddy's Wall Street buddy money and the loose legged whores that hang around them
It's demographics. Old farts, like me, want safe investments. No time to recoup from a bad draw down. Not only that, they have been investing for 30-40 years and have seen this a number of times. The dumb money is the youngsters on Wall Street.
Safe investments? Like what?
But, clearly, the younger people (not the Wall Streeters) don't have the cash flows to pump up the Ponzi (keep it going). And, it's really these people that put the floor under YOUR investments. A clear example of this was many years ago (5?) when UAW negotiated with GM(?) and came away protecting retirees benefits while reducing entry-level wages- the old folks cut their throats, the younger people would not have the wages in which to buy them out out down the road*.
* Many retirees plan to sell their house. If their "replacements" can't afford to buy the houses then that kills retirement their plans.
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