Comments on: The Myth of Sideline Cash http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 18:29:42 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: The Myth of Sideline Cash - VicktorCapitalist http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-222228 The Myth of Sideline Cash - VicktorCapitalist Sat, 03 Oct 2009 16:22:43 +0000 http://www.ritholtz.com/blog/?p=39439#comment-222228 [...] time when you hear again ”still a lot of cash waiting sidelines”, think twice (hat tip the Big Picture and Annaly [...] [...] time when you hear again ”still a lot of cash waiting sidelines”, think twice (hat tip the Big Picture and Annaly [...]

]]> By: Sitting on the Sidelines… • Börsennotizbuch http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220783 Sitting on the Sidelines… • Börsennotizbuch Wed, 30 Sep 2009 06:45:45 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220783 [...] oberen Link (sehr lesenswert) habe ich von hier; dort kann man die vermeintlichen “Sidelines” [...] [...] oberen Link (sehr lesenswert) habe ich von hier; dort kann man die vermeintlichen “Sidelines” [...]

]]> By: pflynn http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220551 pflynn Tue, 29 Sep 2009 17:53:45 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220551 This is Wall Street and the pundits being disingenuous, for there know that it the net cash, not gross, is a better measure. It is analogous to a researching a company financials and on their balance sheet they have four billion in cash; however, it has short-term debt of three billion and long-term debt of ten billion. Does this company really have excess cash to spend? No, the total money market assets are approximately, 3.48 trillion of which, 1.15 trillion is retail money markets, and the remainder is comprised of institutional money markets. The professionals fail to mention that the non-mortgage debt obligation is 2.42 trillion. Does the consumer really have the cash needed to support the economy, NO! We need to normalize the personal consumption expenditures by three to five percent. In doing so, the saving rate would improve, but the economy would suffer. This is Wall Street and the pundits being disingenuous, for there know that it the net cash, not gross, is a better measure. It is analogous to a researching a company financials and on their balance sheet they have four billion in cash; however, it has short-term debt of three billion and long-term debt of ten billion. Does this company really have excess cash to spend? No, the total money market assets are approximately, 3.48 trillion of which, 1.15 trillion is retail money markets, and the remainder is comprised of institutional money markets. The professionals fail to mention that the non-mortgage debt obligation is 2.42 trillion. Does the consumer really have the cash needed to support the economy, NO! We need to normalize the personal consumption expenditures by three to five percent. In doing so, the saving rate would improve, but the economy would suffer.

]]> By: Merger Monday - Steve Cook on Disciplined Investing - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors. http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220413 Merger Monday - Steve Cook on Disciplined Investing - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors. Tue, 29 Sep 2009 13:31:20 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220413 [...] invested in their quarter-end report.An interesting chart on ‘funds on the sidelines’:http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/ Posted 09-29-2009 8:26 AM by Steve Cook Related Articles and [...] [...] invested in their quarter-end report.An interesting chart on ‘funds on the sidelines’:http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/ Posted 09-29-2009 8:26 AM by Steve Cook Related Articles and [...]

]]> By: limaur http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220350 limaur Tue, 29 Sep 2009 04:54:56 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220350 Cash on the sidelines means that less entrepreneurs are willing to borrow to invest , which is why we have deflation and a very low cost of money. In other words, you have misunderstood what is meant by the expression "cash on the sidelines". Cash on the sidelines means that less entrepreneurs are willing to borrow to invest , which is why we have deflation and a very low cost of money. In other words, you have misunderstood what is meant by the expression “cash on the sidelines”.

]]> By: More “Money on the Sidelines” Nonsense | Risk and Return http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220340 More “Money on the Sidelines” Nonsense | Risk and Return Tue, 29 Sep 2009 04:10:48 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220340 [...] Barry Ritholtz jumps on one of my pet peeves, the whole gobs of money on the sidelines scam (silliness, nonsense or delusion work also) which constantly crops up in financial commentary. [...] [...] Barry Ritholtz jumps on one of my pet peeves, the whole gobs of money on the sidelines scam (silliness, nonsense or delusion work also) which constantly crops up in financial commentary. [...]

]]> By: mdod http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220248 mdod Mon, 28 Sep 2009 20:48:45 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220248 Money on the sidelines is NOT a myth, and money is not only created by the Fed. Using yr/yr pct changes for both MZM and the S&P500 to make them trend stationary, MZM growth leads changes in the S&P 500 with a negative 34% correlation. Money is not only created by the Fed. Monetary aggregates can grow for three reasons: the Fed, bank lending, and shorter term changes in money demand (the amount of dollars that we choose to hold...or money on the sidelines). Because the changes in demand cannot change the money in circulation, the yield has to change. Sharp increases in money demand (money on the sidelines) usually can be identified by sharp drops in t-bill yields or a change to a steep sloping yield curves. Holding a money market fund is an alternative to holding stocks. If you can isolate the part of money growth that is coming from money demand, what you are measuring is "money on the sidelines." Money on the sidelines is NOT a myth, and money is not only created by the Fed.

Using yr/yr pct changes for both MZM and the S&P500 to make them trend stationary, MZM growth leads changes in the S&P 500 with a negative 34% correlation.

Money is not only created by the Fed. Monetary aggregates can grow for three reasons: the Fed, bank lending, and shorter term changes in money demand (the amount of dollars that we choose to hold…or money on the sidelines). Because the changes in demand cannot change the money in circulation, the yield has to change. Sharp increases in money demand (money on the sidelines) usually can be identified by sharp drops in t-bill yields or a change to a steep sloping yield curves. Holding a money market fund is an alternative to holding stocks. If you can isolate the part of money growth that is coming from money demand, what you are measuring is “money on the sidelines.”

]]> By: DeDude http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220173 DeDude Mon, 28 Sep 2009 19:30:01 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220173 This seems to suggest that when stock markets are rising a lot of people are quick to rebalance their portfolios and “lock in” the gains in stocks by moving money from stocks into the money marked part of their retirement accounts. However, when the stock marked fall, they are much more reluctant to rebalance the other way - instead they just sit tight and try to ride it out. However, after a real big fall (as in January 03 and February 09) they do seem ready to do some rebalancing out of money marked, presumably into stocks. But they quickly get nervous about stock gains and move money and rebalance into money marked funds to early (July 97 and July 05). This seems to suggest that when stock markets are rising a lot of people are quick to rebalance their portfolios and “lock in” the gains in stocks by moving money from stocks into the money marked part of their retirement accounts. However, when the stock marked fall, they are much more reluctant to rebalance the other way – instead they just sit tight and try to ride it out. However, after a real big fall (as in January 03 and February 09) they do seem ready to do some rebalancing out of money marked, presumably into stocks. But they quickly get nervous about stock gains and move money and rebalance into money marked funds to early (July 97 and July 05).

]]> By: rootless_cosmopolitan http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220157 rootless_cosmopolitan Mon, 28 Sep 2009 18:54:05 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220157 VennData, "But this excellent post goes further. Imagine operating under another “belief” “Sell in May and go away?” and you’re now realizing it should have been “Sell in May and get blown Away.”" Why? Because of the great times that lie ahead? Or from the point of view of someone who believes he is one step ahead of the crowd, knows how to time the market and will be among the first ones at the exit? rc VennData,

“But this excellent post goes further. Imagine operating under another “belief” “Sell in May and go away?” and you’re now realizing it should have been “Sell in May and get blown Away.””

Why? Because of the great times that lie ahead? Or from the point of view of someone who believes he is one step ahead of the crowd, knows how to time the market and will be among the first ones at the exit?

rc

]]> By: leftback http://www.ritholtz.com/blog/2009/09/the-myth-of-sideline-cash/comment-page-1/#comment-220156 leftback Mon, 28 Sep 2009 18:52:48 +0000 http://www.ritholtz.com/blog/?p=39439#comment-220156 A lot of cash will stay "on the sidelines" - not in equilibrium with stocks. Especially after the next Red October™. http://www.calculatedriskblog.com/2009/09/pimco-personal-saving-rate-to-exceed-8.html A lot of cash will stay “on the sidelines” – not in equilibrium with stocks. Especially after the next Red October™.
http://www.calculatedriskblog.com/2009/09/pimco-personal-saving-rate-to-exceed-8.html

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