Sex, Lies And Asset Allocation
February 3, 2013 | 39 comments | includes: BHP, EEM, EWZ, FXI, GLD, GTU, HYG, MCD, MDY, PSLV, SLV, SPLV, TIP
seekingalpha.com
[Johnny: I am not sure I understand this author's rationale for the stock market being drive up due to the high amount of liquidity being generated by the Fed. If the retailer investor is not borrowing money at low interest rate and investing it in the market and they are not shifting from bonds to stocks, that only leaves the large institutional investors such as hedge funds and pension funds, large financial institutions and individual companies that have large cash hordes. The conventional thinking has been that companies with large cash hordes are not investing in their businesses and as a result the employment outlook has not improved. If this is the case I have my doubts that they would be investing in more speculative stocks outside of their own companies. Similarly we have seen a trend where companies that do not need the money have borrowed anyway in order to ensure their lines of credit will not be reduced or taken away. Borrowing to pay special dividend at the end of last year is a good example of this. Oil and gas E&P companies before last year were also doing this. So that just leaves the large financial institutions, the hedge funds and the pension funds. Do they have the reserved to move the markets to the current heights?] |
