Less Cash, More Equity

I have a quote in today’s Ahead of the Tape column in the WSJ regarding the improving tenor in the markets post-August:

“The S&P 500 already is up nearly 5% this month. The American Association of Individual Investors’ latest weekly gauge of attitudes, released Thursday, showed a 13-point increase in bullish sentiment on top of a 10-point gain the week before. In fact, the Aug. 26 survey, which showed just 20% of investors were bullish on stocks, was the lowest since March 2009. And that marked the start of an aggressive 13-month rally that sent the market up by 80%.

So it isn’t any wonder that investors smell a buying opportunity now. Fusion IQ chief executive Barry Ritholtz, for example, waded back into the stock market last week, reducing his firm’s cash position from 80% to just over 50%.

“[That] does not exactly make us rampaging bulls,” he said. But “we felt we could withstand a little more risk,” given the overly negative sentiment and the prospect of gridlock in Washington following the midterm elections—which typically plays well for Wall Street.

As noted back on September 1, we moved to a 56% cash position, and that has drifted lower over the past 10 days. As I said then, “This is merely a bounce, and when they come along, we want to play.” That makes this a shorter term position — meaning weeks and months, not quarters or years.


September to Remember After Grim Summer

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