Wednesday, October 7, 2009

Not sure I buy the "Wall of Cash" argument

“There is a wall of cash out there seeking income-earning assets,” Anne Richards, who oversees 129 billion pounds ($207 billion) at Aberdeen Asset Management Plc, said in an interview at the company’s offices in Edinburgh. “That wall of money will be supportive into next year.”

But here's the thing. With rates as low as they're likely to go, that cash is already where people feel the best risk/reward is offered. As rates climb, that cash will chase higher fixed-income yields.

And illustrated below, there was a ton of "sideline cash" in the mid-90's, but the market ran up without it...

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