Jon Markman: Stocks blitzed to new highs again in the past few days, capping a remarkable three-week melt-up that’s been sparked by a growing sense that nothing can shake this market.
Sentiment is quietly confident, rather than ebullient, as expectations are high among professionals that both GDP growth and earnings growth are set to rebound from anemic levels.
Yet the public is still not buying in, which means the advance is sustainable as more people are encouraged to come off the sidelines.
The New York Times reported on Saturday on new research on investors in 16 countries by State Street’s Center for Applied Research that showed retail investors globally were holding an average of 40 percent of their assets in cash, up from 31 percent two years ago.
The lowest levels of cash holdings were in India, at 26 percent, and China, at 30 percent; the highest was 57 percent in Japan.
The U.S. was in the middle at 36 percent, but that was an increase of 10 percentage points in just two years.
Despite the run-up in equity markets, the Times reported, people have resisted rushing into stocks and have instead added to cash.
They have done this regardless of their age or amount of wealth.
The study found that millennials who are under 33 and have the longest time to invest their money were increasing their cash positions at the same rate as baby boomers, who will need to draw on their investments soon.
Why is this happening?