Investors stashed away cash despite soaring inflation as markets turmoil

While there are clear signs of investor caution, extreme levels of cash are sometimes considered – Nationwide This is known as a contrarian indicator, and it bodes well for the stock market, especially when used in conjunction with other indicators of investor pessimism, said Mark Hackett, director of investment research. Hackett sees stocks likely to hold in the near term due to various risks, including underlying earnings weakness as well as high inflation and a hawkish Fed Volatility, but he is more optimistic about the stock market outlook for the next six months.

“There is a degree of coil spring development where if everyone is already on the sidelines at some point, then no one can stay on the sidelines, which leads to your potential for any The good news has led to a very big move,” Hackett said. David Kotok, chief investment officer at Cumberland Advisors, said his U.S. equity portfolio of exchange-traded funds is currently % cash invested almost entirely in the stock market last year. , stocks are too expensive given the risks, including rising interest rates, a possible recession from the Federal Reserve and geopolitical tensions, Kotok said.

“So I want cash,” Kotok said. “I want cash to be re-allocated back into the stock market at lower or substantially lower prices, I don’t know what opportunities I’ll have, but the only way I can grab it is to hold that much cash.” 166