Market Update Commentary

Rick Shrier |

Investors often believe that they possess the ability to outperform the markets. This belief stems from a combination of conducting their own research and being bombarded with financial headlines or market pundits' opinions on market direction. Consequently, investors feel well-equipped to decipher the mysteries of the market. However, how often do retail investors make the right moves? Examining the notional value of retail money market funds over time, we can observe periods where investors were most fearful based on the high levels of cash and cash equivalents or when investors were most greedy and moved their cash to risk assets. This suggests that retail investors have a subpar ability to time the market, as evidenced by their behavior of holding high levels of cash during the market rally following the pandemic or holding low levels of cash during 2022 when the market went into a bearish phase.


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