The Market is Perfectly Set Up For Another 2008 Crisis
by Phoenix Capital Research
With analysts and commentators everywhere coming up with all kinds of nonsensical “fundamental” reasons why the market has rallied (strangely performance gaming and manipulation never seem to get mentioned), I thought it worth seeing if indeed there were investors who were “buying” stocks today.
Few metrics gauge this as well as mutual fund cash levels. With over $10 trillion in assets, stock-based mutual funds are a decent benchmark for the “herd.” With that in mind, it’s worth noticing that mutual fund cash levels are at their lowest levels in over 40 years!
That’s right, mutual fund cash levels are lower than they’ve been in 40+ years. Lower than they were during the Tech bubble and lower than they were when the market put in an all time top at the peak of the housing bubble. Put another way, mutual funds are more “all in” than they’ve been in 40+ years.
On top of this, the financial system is even MORE leveraged than it was during the Tech Bubble.