Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
Goldman: ‘There Is Limited Combined Firepower To Buy Stocks’
Over the course of 2019, analysts and market observers have variously described the surge in US equities as "flow-less" - it's been a "rally that nobody owns" - a "big, fat buyer's strike".
Blame it on the sheer scope of Q4's drawdown or, relatedly, on how jaded and betrayed some investors probably feel after nearly a decade of uninterrupted gains (a couple of brief hiccups notwithstanding). But the fact is, not everyone has been on board in 2019. Indeed, the bull case from here rests, at least
I understand there is little ‘demand’ from smart money types who do not want to buy stocks at the top of their historic valuations. I understand if allocations are heavily tilted towards equities and not in cash or cash-like instruments. I am, though, really confused about the word “firepower”, that is, capital. In all of the talk about flows or forced re-risking or de-risking from one asset to another asset class, I don’t understand why no mention is made of new money pouring in.
I am a dumb money retail investor, but I have a job and this job gives me income and I use a portion of this baby money every two weeks to inject more money into my little account. Wealthy people and banks and pension fund managers and such also earn incomes and fees and have liquid accounts, no? Can’t they do capital raises without having to sell off something else? Don’t they have income streams to provide firepower if the will was there to push demand higher?!
@ Harvey – Good point. It reminds me that the ongoing concentration of wealth is a buoyant property of the markets (or headwinds if you are contrarian). As corporations (and individuals) amass greater cash, they necessarily will allocate it, whether it be share repurchasing (for corps) or outright positions (vis-a-vis individuals). But with a eye to the horizon, we sail against the wind when we are called to do so.