UBS Issues Market Report (concern over high cash levels)

PRNewswire-First Call via yahoo ^ | January 15 2004 | Press Release

[Tauzero]

Press Release Source: UBS

UBS Issues Market Report Monday January 12, 2:03 pm ET UBS Strategists Express Concern Over High Levels of Cash Held by U.S. Investors

NEW YORK, Jan. 12 /PRNewswire-FirstCall/ -- The bear market over the past three years has driven cash holdings from 11.6% in March 200 to 16.4% by mid-2003, writes UBS Wealth Management USA's Chief Investment Strategist Mary Farrell and her team of strategists in a research note released today.

"American households are ringing in the New Year sitting on more cash than ever," writes Farrell. According to the most recent release of the Federal Reserve flow of Funds Accounts of the United States, the household sector is holding onto over $5 trillion in cash-or cash equivalents. "Although investor sentiment has greatly improved, cash holdings remain stubbornly high." Farrell adds.

UBS strategists expect short-term rates to be boosted by the Federal Reserve in the second half of 2004. Even so, it is unlikely they will be boosted to levels that would make cash attractive to long-term investors.

Another issue facing the long-term investor, Farrell notes, is the overall income lost by not investing in higher-return assets. "As stocks have a much greater average return and a much higher risk profile than cash, the key consideration for any investor is time horizon," writes Farrell. "In any one year, stocks have a 62% chance of outperforming cash, but as an investor's holding period increases, so does the probability of equity outperformance."

Also included:

Dogs of the Dow: This investment strategy is spotlighted.

UBS is the world's largest wealth manager, a premier investment banking and securities firm, and one of the largest global asset managers. UBS employs almost 66,000 people and has operations in over than 50 countries and all major financial centers.

[Tauzero]

"the key consideration for any investor is time horizon"

Another possible clue on the money supply figures?

[Tauzero]

Bookreader ping

[John Beresford Tipton]

"Strategists Express Concern Over High Levels of Cash Held by U.S. Investors"

"Concern"?
Would think that they would be happy, rather than concerned, as this is potential buying power not yet committed to the stock market.

[Dansong]

Agreed - $5 Trillion sitting on the sidelines. When, not if, it comes into the market it will be huge!

[Steven W.]

concern over the people who are potentially losing money.

[Tauzero]

I think they're concerned because they think it's weird. Doesn't make sense, since returns have been so much better elsewhere (almost anywhere, really.)