Investors Are Hiding Out In Cash: Assets In Money Market Funds Surge Past $3 Trillion

Ted

FYI: Cash is becoming the king as investors flee volatile stock markets.

Assets in money market mutual funds have swollen to $3.066 trillion, their highest level since March 2010, driven by retail investors. The money fund assets had spent much of the last decade in the $2 trillion range but tracked above $3 trillion again in mid-December, coinciding with a late-2018 market downturn that resulted in the S&P 500 posting a 6.2 percent drop for the year, it's worst showing in a decade.
Regards,
Ted
https://www.cnbc.com/2019/01/14/money-funds-reach-3point07-trillion-most-since-2010-as-investors-flee-volatile-markets.html

hank

“(Oppenheimer’s) Stoltzfus notes that investors have a poor sense of timing when it comes to stocks. Investors pulled more than 27 percent out of stocks in 2009, a year when the market bottomed out amid the financial crisis and then rallied to end up 23.4 percent. . . “

But there are stark differences between those two situations. In early ‘09 the market was in the process of bottoming following a brutal 30-40% 18-month decline; whereas in 2018 the market had recently attained all time highs after a 10-year bull market when the exodus occurred. So he’s not being totally honest in the way he’s trying to compare those two rather dissimilar periods.

On the larger issue: You saw it here first. It became quite apparent beginning in early November that a good many retail investors were fleeing equity funds (or reducing exposure) and moving into cash & short-term money market instruments. And (perhaps predictably) shortly after that it was noted that yields on cash & cash proxies had begun to fall back.