Mattress Money Is On The Move

On December 23rd, I first expressed my view (read here) of possible "mattress money" exodus, which could propel the stocks to new all-time highs. I continued with my observation (read here) on this development on January 4th. The news about reallocation trade is now being trumpeted all over the media, so this will be the last time I will speak on the issue.

Just one week after many institutional players suddenly woke up (courtesy of FOMC Dec. 11-12 meeting minutes) and realized that they may need to sell some of their US Treasury holdings, we find out about major (historical) retail investor fund flows into equity mutual funds and stock ETFs.

Many market watchers will tell you that retail investors always buy at the top. But the fact that retail investors are also joined by institutional investors in this reallocation trade (out of bonds into stocks) may mean that it will take some time to play out. Stay with this trade until it stops working. Use the chart below as your guide.

click on chart to enlarge