i have actually commented on this earlier...in other historic bear markets, cash positions got a lot higher, namely to 12% and more. this refers to TRUE bears, not declines of a few weeks like in '98.
still, the high cash positions at the mufus is the best of her arguments. imo this cash is likely to be deployed once good news in any shape or form hits us, like e.g. a resolution to the election mess. probably will result in a huge one-day bounce. however, one has to keep in mind that we have still not seen redemptions hit. the public is fickle..while generally inclined to sit tight during bears and suffer through them, there's also this tendency to panic at certain choice moments. it is conceivable imo that we could see a few days of heavy redemptions that lead to even more cash being raised. mind you, i'm not saying it WILL happen, only that it potentially could.
also, the biggest fund of them all, Fido's Magellan, holds almost no cash, generally only slightly above 2% of assets. its managers like to rotate, and i think their activities were behind all that crazy rotation we've seen this year.
another, more general rebuttal would be the Japanese bear...that's the classic bear market with the biggest amount of sidelines cash ever seen hibernating in almost zero interest deposits right next to it. what i'm saying is sidelined cash has no obligation to go anywhere. it might be quite comfortable with staying on the sidelines.
at some point it will find its way back into the market...and then we'll get another nice bear rally to go medieval on.
fact is, signs of distribution continue to proliferate. and Harpo had a year end target of 1575 on the SnP, and i doubt very much that that's going to be hit. she only issued it two or three weeks ago. so forget about her 12-month target...we're looking at a propaganda exercise that aims to stabilize the market. but as always, fighting the primary trend is not a good idea. |
