RIA Advice on 'Cash On The Sidelines'
A website named RIA Advice posted a brief entitled, "Money Market 'Cash On The Sidelines' -- A Myth That Won't Die." It tells us, "As money market account balances soar, the mainstream media again proclaims, 'There is $6 trillion of cash on the sidelines just waiting to come into the market.' ... The surge in money markets since the 'pandemic' has revived the age-old narrative that 'money on the sidelines' is set to come into the markets. However, they don't tell you those funds have accumulated since 1974. Correctly, in the aftermath of crisis events, some of these assets rotate from 'safety' to 'risk,' but not the degree commentators suggest." It continues, "We have repeatedly discussed this myth, but it is worth repeating, particularly when the financial media begins to push the narrative to garner headlines. There is a superficial, glib appeal to the idea. After all, lots of people hold money on deposit at the bank, and they could use that money to buy stocks, right? After all, the latest financial data from the Office of Financial Research shows more than $6.3 Trillion sitting in money market accounts." The update adds, "If we look specifically at retail investors, their cash levels have been at the lowest level since 2014 and are not far from record lows. At the same time, equity allocations are not far from the levels in 2007.... The same is valid with money market levels relative to the market capitalization of the S&P 500 index. The ratio is currently near its lowest since 1980, which suggests that even if the cash did come into the market, it would not move the needle much."
