Time Frame: Long
Category: Contrary Opinion

Description

Since the early 1980's mutual funds have become an increasingly influential component of the investment arena. Professional money managers' level of confidence in the market may be measured by their percentage of assets held as cash. Cash equivalent assets also represents potential buying power. Major market bottoms are often formed when cash levels are high and confidence is low. Conversely, low cash levels can be a warning of diminishing buying power at market highs.

Calculation & Significant Levels

Mutual Fund Cash Level: The average mutual fund's level of cash and cash equivalent investments as a percentage of assets. It is recorded monthly.

Formula:  (value of mutual fund cash and cash equivalents)
          ------------------------------------------------
                  (total value of mutual fund assets)

Gauge Elements: Magnitude
Updated: Monthly

Strategy