It looks like Macke is onto something. In this market, cash is king. Scrambling for safety and bracing for renewed deterioration in the global economic outlook, investors pulled a net $43.3 billion from all equity mutual funds so far in October while pouring nearly $60 billion in money-market mutual funds.
"It is extremely unusual to see this drawdown, not only in stock funds but bond funds," Conrad Gann, TrimTabs' president and chief operating officer, said in an interview. "Investors are putting their money in savings accounts, insured checking deposits and any fund that has a 'Treasury sticker' on it -- anything else isn't being considered," he added.
That sentiment is echoed all over the Street. According to the latest Merrill Lynch survey half of all mutual fund managers are now overweight cash while the Wall Street Journal reports, “In recent days, Steve Cohen has moved about half of SAC Capital Advisors’ $14 billion in assets into money-market funds and other short-term securities.”
Also they say, “Israel Englander, whose Millennium Partners also manages $14 billion, has moved $6 billion into cash, while John Paulson also has about 70% of his $35 billion in cash or cash equivalents.
Why are hedge funds fleeing the market?
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For insights we turn to celebrated contrarian investor Bill Fleckenstein.
