Cash is all the rave these days among investors as they flee from temperamental stocks to the safety of cold hard money.
Bank of America Merrill Lynch reports a $208 billion inflow of cash, compared to $7 billion in stocks and $46 billion from bonds.
That’s just the latest evidence that investors are getting spooked by lowering gas prices, increased volatility in China, and a strengthening US dollar.
“The individual investor is scared by the volatility. They don’t want to take risk,” said Ed Yardeni, president of investment advisory Yardeni Research.
Cash is taking the spotlight even though interest rates remain incredibly low. When inflation is figured in, cash is actually losing money.
The average money market and savings account is now netting just 0.11%, according to Bankrate, while high yield online banks like Ally and Capital One 360 are offering closer to 1%.
Through the end of last year, cash actually outperformed stocks and most bond funds, Bank of America said.
David Bianco, the chief U.S. equity strategist, thinks the S&P 500 will zoom 15% from current levels to end the year.
“This is an opportunity for people who see good value in the market. People will find out over time the market is resilient,” he said.