Lee Munson of Portfolio LLC is sad. The otherwise peppy money manager has would-be investors approaching him constantly asking when the market will go down so they can buy stocks. They've been sitting with 40 to 50% cash in their portfolios, hoping for pullback in the market so they can finally put some money to work.
Sadly the market isn't that easy. The last sell-off of any size was ahead of the so-called fiscal cliff. Not many people were rushing into stocks at the time. Once the Cliff was averted stocks gapped higher and haven't looked back since.
In the attached video Munson calls investors' cash hoarding a "mass national problem." He ticks through three things that need to happen for stocks to turn meaningfully south and kill the bull market rally; none of which he believes will occur anytime soon.
1. Fed tightens rates aggressively
Not going to happen unless or until unemployment falls to 6.5% and/or inflation exceeds 2% for an extended period of time. Slight adjustments in the level of quantitative easing aren't a big concern and there's no reason on earth to think Bernanke's Fed is going to shock the system by eliminating stimulus without warning.
2. Stocks get expensive
"We're not even at 14 or 15x earnings right now," Munson howls. "If we were at a historical higher valuation we'd be at 1,675 [on the S&P 500]; we're not even close."
3. Yield Curve inverts
Let's just say the Fed has a pretty good handle on controlling rates.
"It's not about how great the market is, it's about what is going to make it stop. Right now we don't have a single thing that's really going to stop it right now."
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