hud500 (< 20)

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"Cash on the sidelines" argument is bunk.

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October 18, 2009 – Comments (8) | RELATED TICKERS: CASH

Interesting analysis on the stubborn mule on the impact of cash on the sidelines:

The image of a wall of cash on the sidelines waiting to spill over into equity markets is compelling, but does it make sense?

Cash on the sidelines?

8 Comments – Post Your Own

#1) On October 18, 2009 at 11:20 PM, MattH42004 (99.56) wrote:

I think of all the idiotic market speak "cash on the sidelines" is the one I hate the most. John Hussman destroyed this thing years ago, many others have added to the effort since, and yet it just won't die. It's like the Michael Myers of stupid.

There's No Such Thing as Idle Cash on the Sideines

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#2) On October 19, 2009 at 2:23 AM, Donnernv (< 20) wrote:

Dudes:

You are the idiots. I have more cash sitting on the sidelines than both of you, or anyone else on CAPS will ever see.

Don't talk about just the people you know personally. It's a small segment of the real investing world.

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#3) On October 19, 2009 at 2:39 AM, throwerw (30.63) wrote:

you are the idiot for not knowing what to do with your worthless us dollars, lol

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#4) On October 19, 2009 at 3:12 AM, hud500 (< 20) wrote:

FTA. analysts cite the volume of cash stockpiled as a reason for stocks to keep rising

The point is, it's not supported by the data. And as Matt's article says, it's not really on the sidelines anyway.

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#5) On October 19, 2009 at 8:18 AM, Sozurmama (23.02) wrote:

You are the idiots. I have more cash sitting on the sidelines than both of you, or anyone else on CAPS will ever see!

BALLIN!

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#6) On October 19, 2009 at 8:39 AM, devandev (< 20) wrote:

Actually, I have a fair amount of cash on the sidelines as well. Not because "I'm an idiot," but because I'm retiring next year and am afraid of a double dip. I would love to put the rest of it to work, but not at the risk of my near-term future.

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#7) On October 19, 2009 at 8:39 AM, checklist34 (99.82) wrote:

my take on the articles is that they are both good, with good points, and also both somewhat "too cute by half".

if we all sold our stocks today, all of us, not just CAPs game players but say 10% of everyone, the market would crash and we'd get what? maybe a money market bubble? Add to the treasury bubble?

Think of it as a treasury bubble or a money market bubble and resources sitting in those kind of places could ultimately come back to equity markets when people tire of the very low yields.

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#8) On October 19, 2009 at 10:21 AM, leohaas (98.73) wrote:

The article does make one good point:

"...the change in cash is a consequence of a change in demand, not the cause..."

Indeed. It is not because there is cash on the sidelines that stock prices go up. If prices go up for some other reason (for instance because the fear of a depression is disappearing or because quarterly corporate results are better than expected--I purposely mention these two because that is what is going on right now), then people with money on the sidelines regain some confidence that it is OK again to put money in the stock market, and they will. That increased confidence causes an increased demand, which pushes prices up.

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