While equity markets are hitting new highs, a lot of the big money players, fearful of the risks, are going into cash.
Assets in U.S. money market funds have reach $4.6 trillion, according to analysis firm Refinitiv Lipper, exceeding the $3.8-trillion level reached during the Great Recession.
About $1 trillion has been added this year alone.
Despite stock markets’ meteoric recovery since the economic shutdown’s early days, the number of investors in the market is among the lowest in ten years, according to Deutsche Bank.
Some investors fear stock markets have soared too far too fast and will correct; others are not playing the market but keeping ready cash to put into specific attractive buying opportunities, observers say.
Investors are flummoxed by stock markets’ volatility; the S&P has zoomed up 40 percent from its March low, then sank almost 6 percent 18 June and bounced wildly on the following two trading days. It has been trading at close to 22 times expected earnings, a price-to-earnings gap reminiscent of the 1990s’ dot-com bubble.
Also, markets’ “irrational exuberance,” as Alan Greenspan once called it, in the face of an economy sliding into depression gives investors pause.
TRENDPOST: Another red flag: even as markets soar, hedge funds and other big speculators have been taking bearish positions on stocks at a rate not seen since 2016.
