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Have you heard there is just so much money still on the sidelines, rocket fuel for further equities gains?
This happens to be one of those rare situations where it pays to step out of the absolute - and into the relative.
The WSJ AM Markets column has a nice chart - though I always wish charts went back farther (and I will provide the long view of this metic in the next Short Thoughts).
The concept is simple, relative to the US stock market’s total market capitalization, today’s sideline cash is just about where it has settled in the post-GFC era.
The below chart is not adjusted for interest rates. Higher interest rates normally would entice more people into bonds and money market funds.
This has not happened. Which is the real story. Adjusted for interest rates, the amount of sideline cash is near all-time lows.
Flip that argument on your financial advisor.
