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Monday, June 15, 2009


the fallacy of sidelines cash

via clusterstock , henry blodget citing john hussman.

So what really happens when all that money gets up out of cash accounts and comes "into" the market? It goes into someone else's cash account. And maybe they put it back "into the market" (into someone else's cash account). And so on.

So beware morons talking about "all that cash on the sidelines." Really what they're talking about is bearish investors who may one day become bulls and be more eager to buy stocks than their current owners are to keep them (which will drive the prices up).

very true -- and a very widespread misconception of how the stock market actually changes prices.

there is a market, however, which is currently seeing massive amounts of sidelines cash being sucked into it -- and that is the treasury debt market, which is selling large tranches in primary offerings almost weekly.

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