1930: “Money on the Sidelines”
By Barry Ritholtz - September 3rd, 2009, 10:30AM
This is from “News from 1930” website
“There’s a large amount of money on sidelines waiting for investment opportunities; this should be felt in market when “cheerful sentiment is more firmly intrenched.” Economists point out that banks and insurance companies “never before had so much money lying idle.”
-August 28:, 1930
The more things change . . .
>
Source:
“News from 1930” website
http://newsfrom1930.blogspot.com/2009/08/favorites-of-week-august-25-august-30.html
Tweet
Facebook
Reddit
Digg this!
September 3rd, 2009 at 10:32 am
Damn, BR! Trying to get all of your posts in before the wife wakes up?
September 3rd, 2009 at 10:36 am
Amusing typo. I think that small business certainly feel “firmly intrenched”. In a deep trench, full of cold water.
I have mentioned to people recently that this is 1930. May as well have told them I was from Mars…..
There are quite a few big shorts sitting on the sidelines, waiting to sell the crap out of this market.
September 3rd, 2009 at 10:37 am
In relation to cash on the sidelines, check out:
http://gestaltmacro.blogspot.com/2009/08/fallacy-of-cash-on-sidelines.html
September 3rd, 2009 at 10:49 am
How can there be any substantial cash on the sidelines when there’s not enough cash to pay our existing debt? Magic.
September 3rd, 2009 at 11:17 am
There’s no such thing as “money on the sidelines.”
If some one wants to buy a stock for $100, to buy it they take money out of their money market. The seller gets the $100 and puts it in their money market. No difference in the amount of “money on the sidelines.”
If you repeat this over and over… you still lend up with the same amount of “money on the sidelines.”
If the Fed sells bonds, there is less “money” out there. If they buy bonds, there’s more.
September 3rd, 2009 at 11:22 am
[...] You Heard This Before? Sep.03, 2009 in Odds and Ends Found this today on http://www.ritholtz.com/blog/2009/09/1930-money-on-the-sidelines/ “There’s a large amount of money on sidelines waiting for investment opportunities; this should [...]
September 3rd, 2009 at 11:39 am
VennData, one catch to your point is that there could be “new money” on the sidelines. For example, I have been hoarding new cash in my 401k since 4/07. That is truely “money on the sidelines” because I earned it and kept it out of the market. Millions of other investors are doing the same thing, so there is actually such a thing as “money on the sidelines”. Companies do the same thing.
The point is… those that use the arguement that money on the sidelines is a reason the market will go up eventually are completely off-base. The money is on the sidelines for a reason!! The more money on the sidelines, the bigger the problem facing the economy. And the money can stay on the sidelines indefinately. People always do what they percieve as being in their best interest. They are not hoarding money because they just want to. As soon as they have reason to believe that the economy is truely improving and the outlook is hopeful, they will invest. But they will not just invest because the market has come down. It can always go lower, and now we all know that first hand.
The media uses extreme readings on certain metrics as a reason to buy the market. However, extreme reading can also be a sign that there are huge problems in the economy that will not be resolved quickly.
September 3rd, 2009 at 11:55 am
“Damn, BR! Trying to get all of your posts in before the wife wakes up?”
LOL Vacation=more time to play on the blog. :)
September 3rd, 2009 at 1:09 pm
Smart money on the sidelines does not respond to dumb media on the television.
September 3rd, 2009 at 1:33 pm
Smart money on the sidelines wasn’t really on the sidelines all summer…
It was in TLT…
Oops… I’ve been in TLT all summer…
check that… “Lucky money”
September 3rd, 2009 at 2:37 pm
Wow!
I blushed…because I was using that line early this year…
September 3rd, 2009 at 5:32 pm
I think that before the folks at the “News from 1930″ website post anymore articles, they need to take a few lessons in spelling, grammar and sentence structure.
September 3rd, 2009 at 7:59 pm
http://www.hussman.net/wmc/wmc060710.htm
September 3rd, 2009 at 8:24 pm
from “money on the sidelines” to “people on the sidelines” circa 1930…
http://newsfrom1930.blogspot.com/2009/09/wednesday-september-3-1930-dow-24042-00.html
“Prof. C. Persons quit job in Census Bureau because higher official decided to exclude from count of unemployed those laid off with ‘promise of reemployment at some indefinite future time’; Prof. Persons estimates there are 5M unemployed, contradicting census estimate of 2M-3M.”
September 4th, 2009 at 4:39 pm
[...] 1930: “Money on the Sidelines” (Ritholtz) [...]