$7 trillion in cash waiting to hit markets?

Last night I went to a meeting put on by my dads financial planner. They talked about market obviously and made the point that this is unique, but not really different from other bear markets. They also made the following comment:

" There is a tsunami of cash building in the global market. There is over $7 Trillion in cash sitting in money market accounts. At some point, the wave will break and this cash will start to flow back into investments. "

Do any of you who know agree with this?

I see two markets right now that are getting to be good buys. Real Estate and the stock market. Which do you think will money flow to and/or in what order?

What do you think will trigger the wave?

Been asking these questions of myself while I slept last night. :biggrin

DB

That wave of cash will be triggered by the BIGGEST CRASH in Stock market History…

Don’t let ANYONE BS you…this market is going DOWN from here BIG TIME. We haven’t seen ANYTHING yet.

How do I know this???

I KNOW this because ALL I READ is… NOW is the time to BUY STOCKS. This will lure people into the BIGGEST MISTAKE of their investing LIVES!!!

Stocks are a simple measure of the HEALTH and PROFITABILITY of a company.

Ask yourself… If the BIGGEST REAL ESTATE, FINANCIAL, COMMODITY, and CREDIT COLLAPSE we’ve ever seen in our lives equals IMPROVING fundamentals for COMPANIES??? :shocked

Remember this is happening on a GLOBAL SCALE…and IT JUST GOT STARTED!!! It is LAUGHABLE that at the EXACT point when the TRUE depth of this crisis starts hitting companies BALANCE SHEETS, our favorite “advisors” are telling us to DIVE IN!!!

I don’t have a financial advisor. I don’t have one because about 10 years ago we sat down to go over some stocks I had purchased on my own the previous year. He spent the next HOUR asking ME, how, why, and when did you buy these stocks??? What do you read?? How did you come to that conclusion??? How come you did the exact OPPOSITE of what everyone else was doing??? Can I ask you your opinion of these stocks??
It was a JOKE…

The BOTTOM in stocks will come just as it has in REAL ESTATE…When
merely MENTIONING an investment in Real Estate brings looks of SHOCK you know you’ve hit bottom!!! These days when I tell people I buy and sell homes, they look at me like I told them I enjoy drinking BLEACH on occasion.

Very soon…these same people will have the same reaction when you tell them your buying a companies stock!!! Right NOW, those people are doing what YOUR advisor told YOU to do. They’re DOING IT because THEIR “professional advisors” are telling them it’s a GREAT TIME to invest!!!. A GREAT question for your advisor might be… WHY WASN’T I OUT OF THIS MARKET LAST YEAR???

Do yourself a GIGANTIC FAVOR…Go to this site…RGE MONITOR. This is Nouriel Roubini’s thoughts on where we are headed and WHY. This guy called EVERY SINGLE move the world economies have made in the last 3 years, and he made his predictions 5 YEARS AGO!!! EVERYTHING he said would happen HAS happened. He DOES NOT paint a pretty picture for stocks and the economy for the next 2 to 3 years.

NOTHING EVER CHANGES…

Same circus, different clowns.

The stock market should be around 2000 to 4000 based on the performance of the companies on the stock market. The reason that it is anywhere above 4000 is that in the 1980’s companies decided that they were not going to fund pensions anymore. They twisted employees’ arms into buying into 401ks. That means that every Friday with each paycheck 2% to 6% of most payrolls in the USA go into brokerages accounts. The lion’s share of this money goes into stocks. There are a lot of dollars chasing the stocks that are available thus the price goes up. People have turned their 401k accounts to cash and thus stocks are starved. But this money is building and must go somewhere. Eventually the employees will start buying stocks again and the prices will rise.

The single BIGGEST stock buyer in California TODAY is the California Teachers PENSION FUND.

Money went into the stock market THEN and it STILL goes into the stock market NOW.

The only difference is who GETS THE MONEY!!!

We went from a DEFINED BENEFIT pension system, were you received a
guaranteed weekly or bi-weekly payment, to a DEFINED CONTRIBUTION SYSTEM were ALL BETS ARE OFF!!! You get what you GOT when you retire. If that retirement should come in 2008…OH well, your SOL buddy.

The defined benefit plans that are still around can become a two edged sword for the companies sponsoring them. In a heavy down market such as today the value of the assets held in the pension fund will fall and thus require the sponsor (company) to pony up additional cash to ensure that returns/cash are sufficient to fund the obligations. This becomes a problem if the sponsor is suffering a business downturn and does not have the cash flow to fund the shortfall. I mention this as Calpers just announced they will have to infuse cash into their pension funds due to the drop in asset values.

This is what is called the retirement myth. Most of you guys are too young to have been in the work force when people could actually retire. The U.S. Census of 1970, 1980, 1900 and 2000 shows that 9 out of 10 Americans retire at or below poverty income levels. We wonder why a country of 200 million people would follow a path that leads to this. It is because they changed the rules on us. When I got out of college and started to work for DuPont, as part of the orientation they explain how retirement works. Retirement is like a 3 legged stool. Without any one of the legs retirement doesn’t work. The legs are a pension, personal savings and social security.

Because companies don’t have pensions anymore people retire into poverty or have part time jobs as greeters at Wal-Mart.

… 3 legged stoool…'splain please

Picture a stool with three legs. If you remove one leg from that stool, it falls down. Thus, the three legged stool analgy. If you don’t have one of the three legs of retirement as described by Bluemoon, then you have a crappy retirement - at least that’s the theory.

I have a different theory. My theory is that the country is broke and that social security won’t survive much longer. Companies must compete in the global market with countries that pay their workers only a fraction of what is required in the US. Therefore, I believe that anyone counting on a pension is delusional at best. So, my retirement has only one fat leg (like a pillar), entirely based on living on the cash flow from my rental business. We’ll see how that works. I’d rather bet on me than on the government or a big company!

Mike

Um… ya… I understand what a stool is and how it works.

What are the 3 legs of the retirement stool discussed in retirement class at dupont? that is the question…

soc. security, pensions, and personal savings, bonds/no mtg. perhaps?

He had that in his original post:

The legs are a pension, personal savings and social security.

Mike

I dont believe our economy is gonna be in the hole for a prolonged recession. some very smart people believe we are for a long recession 2 years or more !! but you have to look at the weapons that are shaping up to fight the recession. Energy and commodities prices have fallen hard, people who do have jobs and people who have money from any other source will have more money to spend on things. the government and fed have the piggy bank doors wide open to fix the credit crisis and that is already seeing some traction.

1 angle people arent seeing much is yup the housing problem will be good for new buyers and to build a stable economy. cheap home prices will allow people to buy house WITHIN THEIR MEANS and worth their value being paid. not an artificial inflated price because no one is watching.

I am not as gloomy at all of our situation. watch what happens when the rescue package gets fully into the system and banks start trusting each other. lower rates will help spending also.

the us dollar has its strength once again. the rest of the world needs america to survive. we will be the 1st out of the muck.

we will have some tough times dont get me wrong but we can come out of this mess quicker than the doom and gloom views think.

Yes what propertymanager said. The problem is that if you follow the plan given to us by the company that we work for, we are going to retire at or below the poverty level. Retirement takes more than we can do ourselves. All we can do is save. We have 1 leg. But we can’t save enough money to retire properly. Only 1 out of 7 people over 65 years of age in the USA can write a check for $700. The median 401k has $36k in it. The person that follows the plan given to us won’t have enough resources to retire. In other words, retirement is a myth.

My plan is to not retire but to call in rich.

“My plan is to not retire but to call in rich.” -

I LOVE that outlook!.. Count me in! :beer

Uh you think those money market funds are all cash on the sidelines? They are either invested (long or short) and holding cash for redemptions. There is not a “tsunami” of cash on the sidelines as some would have you believe.

That said, dislocation of US treasuries could definitely put a lot of cash into the equity markets (probably mostly commodity related).

Altered due to rules violation

Some things to consider

1. Money is in money market funds precisely because the stock market is such a bad investment now.
2. People can’t get credit so they can’t buy basic items.
3. If they can’t buy basic things, how will this money flow into the stock market?

With all due respect, unless your financial planning is a technical chart analyst who works on Wall Street, he will be ILL EQUIPPED to call a market bottom.

I just talked to a friend who IS a technical trader, and he is predicting a 6200 stock market in two months.

Foreign countries have pulled their money out of the market because they are experience their own recessions and large RICH foreign investment countries are pulling out so that the market falls enough that many things can be had at a FIRE SALE PRICE…

When it comes to retirement savings. It amazes me that people are planning to be poor in their “golden years”. :shocked Is that what you work all your life for? The logic is that your home will be paid off, the kids are grown, etc… But here something they’re missing. You’re also getting older & sicker! :shocked I work in healthcare. I’ve seen recent retirees get a prolonged illness and end up in a nursing home. If you’re paying for health insurance, that gets expensive along with copays,prescriptions, etc… Not to mention that people are living longer, which means they’ll need more money. I’ve seen the cost of healthcare LITERALLY wipe out an entire retirement fund in 5yrs. I get to know my patients very well and they tell me these things as a warning. Time and time again they’ve told me,“Take what think you’ll for retirement and triple it!” Then end up getting to the point where they can no longer afford health insurance. They have to apply for Medicare/Medicaid. The kicker is that you can’t have more than $2000 in assets to qualify for Medicare/Medicaid. So you’re forced to be poor. Like was stated in the previous posts, this all changed the day that the 401K’s replaced the true pensions as a retirement vehicle. The cost was shifted to the emplyee’s side and they were forced to put all that money into “expert” money managers and hope and pray it works. The true pensions cost the employee nothing but a lifetime of work and had little/no risk. They still have to work a lifetime. But the cost and risk is all on them…

That’s why everyone should do estate planning before they get sick.

You’re right BLL. I also think its a good idea to have long term care insurance. But I believe the reality is that people don’t think they’ll need these things. They also believe that somehow the govt.(or somebody) will take care of them. It’s a recipe for disaster in my opinion. My retirement plan is to eliminate personal debt, increase “passive” income. I realze that rental income in ot passive, but it sure beats trading hours for dollars and/or relying on other people’s expertise for my retirement.

My retirement plan is to raise kids. And spoil them. They will spoil me in my old age… :O)