The Myth of Sideline Cash

A quick look a chart on Money Market Mutual Funds belies the common belief that “cash on the sidelines” is what powers markets higher.

As the chart below reveals, the Market goes up, and as we saw in the 1990s and from 2005-08, so too MMF goes up.

This is evidence against the standard sideline cash argument.

Indeed, rather than investigating these common aphorisms, if you trade on them at face value, you will be disappointed.  Unless you thoroughly data verify and prove/disprove ANY AND ALL Wall Street myths, rules of thumb, or standard trading phrases, you are going to a) develop a false belief system and 2) that will eventually lose you lots of money.

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MMF and SPX
chart courtesy of Fusion IQ

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See also:
Cash on the Sidelines Chart Book
Annaly Capital
http://www.annaly.com/blog/?p=520

There’s No Such Thing as Idle Cash on the Sidelines
Hussman Funds
http://www.hussman.net/wmc/wmc060710.htm

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