No. of Recommendations: 6
Every time someone moves some of that cash "from the sidelines" and buys stock, there is a seller who is selling that stock and taking the cash and "moving it to the sidelines".
This is certainly true on the equity markets, where every buyer has a seller. It isn't possible for the world to "sell out" in that sense.
But not true on the cash side...cash can come from, and go to, other destinations. In that sense you could certainly have cash on the sidelines...cash that isn't allocated and only *might* get allocated to equities.
I'm not fond of looking at cash or margin balances relative to market cap, since market caps change with recent prices. I usually track those relative to the aggregate sales of the market, so at least bubbles don't change the result you get.
Jim
