Investors are running out of cash — and that's terrible news for the stock market

It's a new reality facing investors of all types. While money market assets make up a record-low 17% of long-term funds, the cash balance of equity mutual funds also sits at an all-time low of 3.3%, according to data.

"A decade of financial repression has turned cash into trash," the firm's macro strategist Vincent Deluard wrote in a recent client note. "There are a lot of fully-invested bears out there. There is not much sidelines cash left to push stocks higher."

Some of the market's very biggest lenders have also highlighted dwindling investor capital. On Morgan Stanley's earnings call on October 17, chief financial officer Jonathan Pruzan said that "we've seen cash in our clients' accounts at its lowest level."

Strategists at Bank of America Merrill Lynch have repeatedly highlighted a similar development among their private clients. Cash for the group has dropped to a record low as a percentage of total assets, they wrote back in July. And while that could be interpreted as investor confidence, all the resolution in the world is meaningless if you don't have capital to spare.

Source: BI
Trader-G.Bozhidarov

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