While I’ve always doubted that the "money on the sidelines" argument is really all it’s cracked up to be, one can hardly argue with a recently released report from Harris Private Bank of Chicago [part of the U.S. arm of the Bank of Montreal (NYSE: BMO) that notes that stocks have rallied for the next two years whenever money market assets have exceeded 25% of the capitalization of the Standard & Poor's 500 Index. According to the Los Angeles Times, that figure is now 43%, down from 58% after having peaked in December - and that's even after the 30%-plus run-up in the S&P 500 since March.

What's interesting is that many investors holding large cash positions view their money as an asset, when, ironically, it's really more of a liability at this stage of the game.

Some might take issue with that statement. After all, even we at Money Morning have counseled readers that cash - correctly deployed - can allow an investor to sidestep the worst stretches of a financial crisis, like the one from which we're currently attempting to extricate ourselves.

But when the markets are as beat up as they as they have been, history suggests there's probably more upside than downside - even if we haven't bottomed out yet.

And there's a broad body of research to support that contention - including our own newly created "LSV (LIBOR/Sentiment/Value) Index" (published as a part of The Money Map Report, the monthly investment newsletter that's affiliated with Money Morning).

There's also data sets widely published by others, such as Yale Economics Professor Robert J. Shiller. Shiller has found that when you look at 10-year periods of Price/Earnings (P/E) data dating all the way back to 1871, the markets tend to rise when the average P/E is low, as it is right now.