Mutual Funds cash to asset ratio - Money on the side?

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It has been known that following the money and placing your bet there is a wise way in trading but only until it dries up. Equity Mutual Fund Cash Equal to 3.8% of Assets in November 09, Just above Record Low of 3.5% in June 2007 and July 2007. They are all in. U.S. Equity Funds Get Estimated $5.1 Billion in December, First Inflow in Five Months. The Investment Company Institute reported Wednesday Dec. 30, 2009 that equity mutual funds held just 3.8% of their assets in cash and equivalents in November. While the amount of cash increased $8.1 billion in November, assets shot up $229.1 billion, leaving the ratio of cash to assets unchanged. 

The next chart shows data that goes back to 1960 where the levels of Mutual Funds cash to asset ratio is currently near all time historical low levels! Chart as of December 2009.

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*Courtesy of Elliott Wave International

The second chart shows you the data (inverted) with the S&P 500 on the top until September 2009.

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*Courtesy of Elliott Wave International

Last chart gives you a similar exact levels of that same cash ratio we have today of 3.8% but just before the 2004 correction that took more than a year to overcome. It shows you clearly that we bottomed numerous times when the cash ratio is high and topped when the ratio is low.

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*Courtesy of Elliott Wave International

On a side note, how about the individual Investor? Also, their exposure to stocks is currently the highest since October 2007 and their exposure to cash is currently the lowest since August 2000 (see chart below).

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*Courtesy of SentimenTrader

Until next article - be happy, do good, and the rest will be taken care of!

GoodVibe
Mr. Lucky

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