We’re Americans. We love Memorial Day weekend.
We’re Earthlings, too. And we’re here to profit
The fact is the rest of the world doesn’t care about Memorial Day.
And global markets were rallying while we were eating hot dogs.
Everything was open…
Except America.
And line go up.
Dow futures rallied over 500 points.
S&P 500 futures got back all of Thursday and Fridays losses, and then some.
So did Nasdaq futures.
Meanwhile, Germany’s DAX Index hit new all-time highs.
Stocks ripped, even when U.S. markets were closed for the holiday.
Cash Is NOT King
So, I can get my head around people sitting out the cryptocurrency action over the weekend and/or Europe on Monday.
I have a harder time with this…
A record amount of cash – officially $7.2 trillion, the most ever – is now sitting in money market funds:
The argument is – and has been for several years now – that cash is paying 4% to 5% for the first time in forever.
And, while that may be true, as it has been for several years now, the risk has been to not own enough stocks.
“It’s risk-free yield, JC…”
I laugh at that. The real risk is right in front of them – and the real risk is not having enough equities exposure.
The S&P 500 generated a 24% return in 2023 and a 23% in 2024. The Nasdaq doubled during those two years.
And you’re getting 4%?
Ouch.
When I hear “risk-free,” I think about something that’s too good to be true.
You know the old saying, “If it’s too good to be true, then it probably is.”
This whole “risk free” in money market-funds has been that.
Now, does all this cash mean it’s good for stocks? Maybe. It can’t hurt.
That’s a lot of money that could be much better allocated. I don’t think it’s bad.
But, as more and more investors, both individuals and institutions, have piled into money-market funds, stocks have been putting up banner years.
I think it’s important as investors to understand what’s going on out there.
Where are people wrong? I think it’s been that. And will be moving forward.
This fugazi version of “risk free” is the part that’s too risky for me.
Line go up…
That’s why we’re buying stocks.
We’re Here To Profit
We’re Americans.
We celebrate Memorial Day. It’s great to spend time with family.
I had steaks marinating for days. We even made smores.
But, as investors, we need to put that aside.
We’re not just Americans. We’re Earthlings.
And we’re here to profit.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs