Cash Allocation At Historic Low

Investors are all-in, as cash allocations show in the above chart.

The next chart suggests per the historical action depicted that we can reasonably expect assets under management in leveraged short funds to roughly double by the nadir of the next major bear market move.

We expect that'd result in holdings such as those we've been accumulating in VXX, TZA and QID to at least double, probably triple, and a five to tenfold rise at some point during the inevitable selling panic wouldn't surprise us at all.

It's happened before, and history repeats.

It won't be different this time.

The sad irony is that even those who've seen and survived a lot of history seem to have learned nothing from it.

This next graphic shows equity allocation by those aged 70 or over is at the same level it was before the last big crash, and has been the past several years running.

When's the plunge?

We think soon, but it'll happen when it happens.

We can only be certain that it'll be extremely ugly for those sitting complacently in equities and especially in levered long positions.  

 



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