High Cash Stockpile Available to Buy Stocks to Fuel a Rally
Americans have an estimated $8.85 trillion in cash, bank deposits (CDs and savings accounts) and money market funds. [ A trillion dollars is one thousand times one billion dollars or one million times a million dollars! ] This is roughly equal to 74% of the market cap of the US stock market.
Americans have not had so much free cash available as a percentage of stock market value to buy stocks , houses or iPods and big screen TVs since the 1980s, over 20 years ago.
Some think this could signal a rebound for the stock market. The
Bloomberg article states:
So-called money of zero maturity, the central bank’s measure of U.S. assets available for immediate spending, is mostly held by households, according to Richard G. Anderson, an economist at the Federal Reserve Bank of St. Louis.
‘Dry Powder’
“What the cash pile on the sidelines represents is dry powder,” said Fritz Meyer, the Denver-based senior market strategist at Invesco Aim, which manages about $358 billion. The firm’s $1.17 billion Aim Diversified Dividend Fund beat 96 percent of its competitors this year, and the $3.95 billion Aim Charter Fund topped 93 percent of similar mutual funds.
“Recovery in the second half of the year will probably play out,” Meyer added.
Any recovery will depend on a rebound in corporate profits and the economy after $30 trillion was wiped out from world equities this year, according to Frederic Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.
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