The Cash Hoard Of 2023 (And The Sideline Money Myth)

The vast “cash hoard of 2023” has the bullish media salivating about what it means for the future of equities. That cash hoard in money market funds now exceeds $5.2 trillion.

Such has brought forth the age-old narrative that the “money on the sidelines” is set to come into the markets. However, they don’t tell you those funds have accumulated since 1974. Correctly, in the aftermath of crisis events, some of these assets rotate from “safety” to “risk,” but not the degree commentators suggest. Interestingly, such did not occur following the pandemic-related crisis.

Money market funds vs Sp500

This is the “myth of money on the sidelines.”

“There are no sidelines. Those saying this seem to envision a seller of stocks moving her money to cash and awaiting a chance to return. But they always ignore that this seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines.”Clifford Asness: