Comments on: Tsunami Of Cash Just Waiting To Be Invested http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html Freshly squeezed market commentary & analysis Sat, 21 Nov 2009 22:51:17 +0000 http://wordpress.org/?v=2.0.2 by: dacian http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38934 Wed, 06 May 2009 08:29:01 +0000 http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38934 Here is <a href="http://globaleconomicanalysis.blogspot.com/2008/11/sideline-cash-theory-revisited.html">another point</a>, different from Hussman. I persoanlly agree with Mish. Here is another point, different from Hussman. I persoanlly agree with Mish.

]]> by: Ed Mullins http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38930 Tue, 05 May 2009 21:52:37 +0000 http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38930 Hussman's arguments are really not the right analogy to today's equity markets (he's really making a different but very valid point about the applicability to economic activity). Think about it, if Hussman's point applied here, then "cash on the sidelines" would hold relatively constant as a ratio of aggregate equity valuations ... when in fact we see a fair amount of movement (i.e., inverse correlation) concurrent with rising or falling equities. Sooo ... high "cash" levels here could be significant. Hussman’s arguments are really not the right analogy to today’s equity markets (he’s really making a different but very valid point about the applicability to economic activity). Think about it, if Hussman’s point applied here, then “cash on the sidelines” would hold relatively constant as a ratio of aggregate equity valuations … when in fact we see a fair amount of movement (i.e., inverse correlation) concurrent with rising or falling equities. Sooo … high “cash” levels here could be significant.

]]> by: dacian http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38923 Tue, 05 May 2009 14:41:55 +0000 http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38923 Here it is (the <a href="http://www.hussman.net/wmc/wmc060710.htm">post by J. Hussman</a>) Here it is (the post by J. Hussman)

]]> by: Michael http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38922 Tue, 05 May 2009 14:15:58 +0000 http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38922 Babak, I'm still trying to find Hussman's study on cash sitting in money markets related to debt outstanding. I believe he published it just after the new year, I just haven't had time to dig through all of the info yet. It was a great piece and something I have yet to hear anyone else address. Babak, I’m still trying to find Hussman’s study on cash sitting in money markets related to debt outstanding. I believe he published it just after the new year, I just haven’t had time to dig through all of the info yet. It was a great piece and something I have yet to hear anyone else address.

]]> by: Babak http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38908 Mon, 04 May 2009 23:15:54 +0000 http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38908 dacian, we've already de-leveraged a lot but there was also a lot of psychologically damage. Not the same as the Depression but this was a brutal bear market and it will leave a mark. Michael, is the debt Hussman refers to margin in trading accounts or all encompassing debt in the economy? The cash is there, of course, but as you and dacian point out, it may have more pressing places to go to than the market. That was also my point when I mentioned that this is merely potential, it doesn't guarantee anything. dacian, we’ve already de-leveraged a lot but there was also a lot of psychologically damage. Not the same as the Depression but this was a brutal bear market and it will leave a mark.

Michael, is the debt Hussman refers to margin in trading accounts or all encompassing debt in the economy? The cash is there, of course, but as you and dacian point out, it may have more pressing places to go to than the market. That was also my point when I mentioned that this is merely potential, it doesn’t guarantee anything.

]]> by: Michael http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38906 Mon, 04 May 2009 21:54:46 +0000 http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38906 Dr. John Hussman has addressed this "misbelief" in the past. While there is no doubt that there is substantial amounts of cash in money markets, there is even more debt. You see, this cash is not "free and clear". There is an absolute boatload of new debt that has been created over that same time period. Now you know, don't buy into the misunderstanding that there is all of this cash looking for a place to go. There is not. All of that"record amounts of cash" is unfortunately offset by "record amounts of debt". Dr. John Hussman has addressed this “misbelief” in the past. While there is no doubt that there is substantial amounts of cash in money markets, there is even more debt. You see, this cash is not “free and clear”. There is an absolute boatload of new debt that has been created over that same time period. Now you know, don’t buy into the misunderstanding that there is all of this cash looking for a place to go. There is not. All of that”record amounts of cash” is unfortunately offset by “record amounts of debt”.

]]> by: dacian http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38905 Mon, 04 May 2009 21:53:36 +0000 http://www.tradersnarrative.com/tsunami-of-cash-just-waiting-to-be-invested-2527.html#comment-38905 Hi, thanks for this new post. Those money sitting on the sidelines might go in stocks, but it's not sure at all. It's about sentiment. In 2006 there were less money on the sidelines, still people were betting more on stocks. How's that? On the other hand, those who've been washed out twice in the last 10 years might not be ready to take the same risk again. While I understand that when there are no other sources of incomes for big banks they still need to come from somewhere (9$ billions in profit for a big US bank last quarter from trading), I have news for these banks. The more they push this time, more we hoard. Lots of those money on the sidelines will be used to pay debt and repair balance sheets. Look at Japan; a secular shift in attitudes towards risk and debt is under way. So I'm not betting on that pile of cash it will find its way into the markets ;-) Hi,

thanks for this new post.

Those money sitting on the sidelines might go in stocks, but it’s not sure at all. It’s about sentiment. In 2006 there were less money on the sidelines, still people were betting more on stocks. How’s that?

On the other hand, those who’ve been washed out twice in the last 10 years might not be ready to take the same risk again.

While I understand that when there are no other sources of incomes for big banks they still need to come from somewhere (9$ billions in profit for a big US bank last quarter from trading), I have news for these banks. The more they push this time, more we hoard. Lots of those money on the sidelines will be used to pay debt and repair balance sheets.

Look at Japan; a secular shift in attitudes towards risk and debt is under way. So I’m not betting on that pile of cash it will find its way into the markets ;-)

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