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A Behavioral Approach to Investing

Using Scientifically Engineered Models

About that "Cash on the Sidelines"

For at least 5 years I’ve heard bulls argue about the “cash on the sidelines” that will be there to support the market should it encounter any “hip checks” along the way to the goal. I just heard somebody talking about it over the weekend on Bloomberg. The problem with that argument is it is not supported by data.

 

Our Chart of the Week this week shows the Household Asset Allocation to stocks is at the high end of the range while the Cash Allocation is near the bottom of its historic range.

Given the relatively low lack of cash, the continuing drop in bond allocations, and the on-going escalation of Babyboomers retiring it is unlikely the “Cash on the Sidelines” will be there when the next economic slowdown takes place. There are still many reasons to be bullish on the market, but this isn’t one of them.

 

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New Kent, VA
Jeff joined SEM in October 1998. Outside of SEM, Jeff is part of the worship team at LifePointe Community Church where he plays the keyboard and bass guitar. He also leads a small group Bible study.