New Record Cash Levels - Investors are still scared

JC Parets
December 6, 2023

The inflows into Money Market Funds continue.

Another $73 Billion came in last week, as investors decide they would rather sit in cash collecting an inflation-adjusted, after tax profit of around 1%.

Meanwhile, the Nasdaq is up 50% from the October lows last year. The S&P500 is up a humble 30%.

Technology stocks are up 60%.

Bitcoin is up 160% this year.

But investors are deciding to close their eyes to the current market trends and, for some reason, hoping it goes away.

This acceptance aversion is classic human behavior. Investors just don't want to admit just how bad an idea it was to "Lock in 5%".

When something sounds to good to be true, it probably is.

A 5% nominal yield, sounds pretty good on paper, but in reality it could not have been a worse decision.

Based on all the data coming in, my bet is that this continues to be a terrible idea.

We're hitting new records in Money Market Funds, now approaching $6 Trillion in assets.

This historic cash position is be built by both Institutional ($3.6 Trillion) and retail investors ($2.2 Trillion).

So when you ask yourself, what will be the catalyst to take stock prices much higher from here?

How about the $6 Trillion in Money Market Funds that has missed this historic rally and needs to rotate into actual risk assets.

I encourage you to go back and study bull markets in the past.

What you'll find is that during bull markets, investors are regularly rewarded for owning stocks.

But what you'll also find in those bull markets is that investors are penalized for not owning stocks, or in many cases, not owning enough.

Is that what's happening this cycle?

Are investors being rewarded for owning stocks? And are investors being penalized for sitting in too much cash?

The answer is yes.

So as it turns out, this cycle is no different.

We discussed this all Monday night on our LIVE Monthly Charts Strategy Session.

During this video Conference Call, you'll find out exactly what we're doing about the current market environment, which stocks we want to own right now, and what exactly the market would have to do to invalidate our very bullish thesis.

Premium Members can watch the replay here and download all the charts.

JC

 

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