Folks don't mind investing their hard-earned money today. And we can see that through their allocation toward cash... [Stansberry Research Logo]
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[DailyWealth] Editor's note: Folks don't mind investing their hard-earned cash today. Stocks are soaring to all-time highs. But according to Vic Lederman – the editorial director of our corporate affiliate Chaikin Analytics – this rally still has room to run. In today's Weekend Edition, we're taking a break from our usual fare to share one of Vic's essays, which was most recently published last month in the free Chaikin PowerFeed e-letter. In it, he illustrates another way to gauge investor sentiment... and details why you should consider taking money "out of the mattress" today. --------------------------------------------------------------- What Investors' Cash Levels Tell Us Today Vic Lederman, editorial director, Chaikin Analytics --------------------------------------------------------------- It's good to have some cash lying around for a rainy day... Life is unpredictable. One day, everything is fine. But then... you get a curveball. You could lose your job, get sick with a debilitating illness, or become a victim of identity theft. Sure, you could file for unemployment benefits when you're out of work. But the way prices have been soaring, government assistance probably won't get you very far. One bad illness or accident can land you deep in debt. And if you're lucky enough to have health insurance, high deductibles and rising insurance premiums will quickly drain your finances. Having enough spare cash lying around can make these unpredictable situations easier to navigate and overcome. It's what a lot of older folks like to call "keeping cash under the mattress." But how much cash do we put "under our mattress?" According to the American Association of Individual Investors ("AAII"), that figure is usually 22% of investable assets for most U.S. investors. The AAII has conducted a survey of regular investors since 1987. And it also found out that, on average, investors place 16% of their money in bonds and 62% in stocks. These allocations fluctuate depending on how bullish or bearish people feel about the economy... For example, during the dot-com boom toward the end of 1999, people were particularly bullish. They had just 12% of their investable assets held in cash, while 76% was in stocks. But when the bubble burst, a recession hit. And by the time unemployment peaked in 2003, investors were holding 38% of their funds in cash. That was triple their cash allocation before the crash. During the depths of the financial crisis in 2009, investors were so fearful that they set aside 45% of their assets as cash. They cut their stock allocation to a mere 41%. So how are individual investors feeling today? As I'll show you, we can get an idea through their cash allocations... --------------------------------------------------------------- Recommended Link: [No. 1 Stock to Buy for the 2024 Election Year]( Marc Chaikin's award-winning Power Gauge system pinpointed the No. 1 stock of the 2016 election year and the No. 1 stock of the 2020 election year... months before the election in November. Now, it just flashed "buy" on the No. 1 stock to buy ahead of the 2024 presidential election. [Click here for the name and ticker](.
--------------------------------------------------------------- Right now, investors are feeling particularly bullish. We can see this in their allocation toward cash. Take a look at that compared with the S&P 500 Index... For all the talk about a coming recession, unemployment is near a 50-year low. U.S. gross domestic product ("GDP") grew an annualized 4.9% in the third quarter. And the S&P 500 is in a bull market that's just 15 months old. As a result, investors have allocated just 17% of their investable assets into cash. That's a drop from 25% during the market correction in October 2022. Meanwhile, their stock allocation has risen from 62% to 67%. Even then, investors are far from being overly optimistic about stocks. That's because history shows that when investors are highly bullish, they've been willing to put more money to work in the stock market. And they're perfectly fine with holding less cash than they have today. We can see that clearly in the chart above. The past three peaks in the market saw cash holdings among individual investors fall to less than 15%. If the economy keeps performing well and unemployment stays low, folks will be comfortable taking more money "out of the mattress" and putting it to work instead. Also keep in mind that this is an election year. Historically, these have proven to be positive periods for stocks. Dating back to 1937, the average gain for the S&P 500 during election years comes in at about 10%. In short, U.S. investors aren't worried today. But they're still sitting on a good deal of cash in a year when they could be putting more to work in the markets. This tells me that we likely haven't seen the peak of this current bull market. That's why I'm still bullish today. Good investing, Vic Lederman --------------------------------------------------------------- Editor's note: Now isn't the time to keep your money on the sidelines. And Marc Chaikin, the founder of Chaikin Analytics, couldn't agree more. He believes sitting in cash is one of the worst mistakes Americans can make ahead of this year's presidential election. A dramatic event is going to take place around the Super Tuesday primaries that could define your financial success. And next week, on February 29, he reveals how to position yourself to profit from it. So don't wait... [Click here to learn the details and save your free seat](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberryresearch.com. Please note: The law prohibits us from giving personalized financial advice. © 2024 Stansberry Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Stansberry Research, 1125 N Charles St, Baltimore, MD 21201 or [stansberryresearch.com](. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Stansberry Research does not recommend or endorse any brokers, dealers, or investment advisors. Stansberry Research forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Stansberry Research (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.