I’m predicting that money fund asset gains will break over $500 billion in 2007, which would make this year the biggest annual gain ever. While the increase is still under $100 billion year-to-date (up $84 billion as of last week), we should continue to pick up steam throughout the summer, and strengthen in the second half.
Most people believe, I think falsely, that there has been a huge buildup in cash over the past 5 years. While there has been a buildup, I believe that the percentage of cash held by individuals, institutions, funds, pensions, etc., is at or near record lows. Investors have been conditioned to get fully invested, and advisors don’t get paid to recommend cash.
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