James Bianco Questions "Cash on the Sidelines" Myth

By on October 7, 2009

Matt Phillips, WSJ Blogger, has posted a Marketbeat interview with James Bianco, Bianco Research, regarding the oft-cited claim that “cash on the sidelines” will drive the market higher. Bianco pretty much scoffs at the idea that $3.5 trillion in money markets means anything since much of the money is ear-marked for expenses, what he calls “transactional balances.”

SMA Comment: Like many things in the market, cash on the sidelines is meaningful when it’s related to other intrinsic measures (for example, stock market capitalization). The more current the data, the more useful it is. I’m not sure how current the measures of investor cash are, but I’m sure there is much less than there was six months ago.



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