Tags: bull | funds | buyers | market

There Are 4.4 Trillion Reasons to Expect a Bull Market in 2015

By    |   Friday, 09 Jan 2015 07:48 AM

Bull markets end when we run out of buyers. I understand that there is a buyer for every seller in the market but each party to a trade has a different motive.

Market makers are taking the other side of many trades and they are simply taking short-term positions. Bull markets end when we run out of buyers who are optimistic about the long term.

We can never know exactly what the majority of buyers and sellers are thinking, but we can use data to see what they're doing. Right now, the data indicate that there are a number of investors with cash that could be used to push stock prices up.

Investment Company Institute (ICI) reports show there is $4.4 trillion in money market funds around the world, an amount that could be moved into investments offering higher rates of return. Equity funds hold $13.8 trillion globally, so money market funds represent 32 percent of that amount. Investors would probably like to own more stocks but are nervous about a decline and waiting for a better opportunity.

Overall, ICI reports fund assets of $31.3 trillion. Cash in money markets represents 14 percent of global fund holdings, an amount that seems like a higher-than-needed allocation to cash.

By any measure, there seems to be a lot of cash on the sidelines and it is difficult to imagine a bull market ending with so many investors holding cash. We should expect to see much of that $4.4 trillion invested in stocks before this bull market runs out of buyers.

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MichaelCarr
Bull markets end when we run out of buyers. I understand that there is a buyer for every seller in the market but each party to a trade has a different motive.
bull, funds, buyers, market
258
2015-48-09
Friday, 09 Jan 2015 07:48 AM
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