Possible Explanation for Rally (again the markets are 60+% moved
by balancing of Passive ETFs and Funds)
From Analysts:
"The Great Equity vs Debt Rebalancing After QE4ever.
Many institutional money managers and funds were unable to
capitalize on what they saw as a buying opportunity after the GVC
depressed the S&P 500 following its February 19 record high.
In particular, balanced funds couldn’t take advantage of the
great opportunity they saw to rebalance away from bonds and into
stocks because the bond markets had frozen up, making it impossible
to raise cash by selling bonds.
That all changed on March 23. We noted that institutional
investors rushed to sell their bonds to the Fed and used the cash
to rebalance into equities. We think investors still have plenty of
bonds to sell to the Fed, which will bring in cash with which to
buy stocks. That would support our belief that the bear-market
bottom was made on March 23. "
I personally do not believe we are out of the woods, and expect
a steep drop soon, but not putting any more capital to that!
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Possible Explanation for Rally (again
Posted by Walt on 10th of Apr 2020 at 03:38 pm
Possible Explanation for Rally (again the markets are 60+% moved by balancing of Passive ETFs and Funds)
From Analysts:
"The Great Equity vs Debt Rebalancing After QE4ever.
Many institutional money managers and funds were unable to capitalize on what they saw as a buying opportunity after the GVC depressed the S&P 500 following its February 19 record high. In particular, balanced funds couldn’t take advantage of the great opportunity they saw to rebalance away from bonds and into stocks because the bond markets had frozen up, making it impossible to raise cash by selling bonds.
That all changed on March 23. We noted that institutional investors rushed to sell their bonds to the Fed and used the cash to rebalance into equities. We think investors still have plenty of bonds to sell to the Fed, which will bring in cash with which to buy stocks. That would support our belief that the bear-market bottom was made on March 23. "
I personally do not believe we are out of the woods, and expect a steep drop soon, but not putting any more capital to that!