Saturday, December 20, 2014

The latest snapshot of the asset allocation of the United States is "risk on"

Total bond market per SIFMA through 3Q2014: $38.65 trillion (49.8%)
Total stock market capitalization per ^W5000 right now: $26.07 trillion (33.6%)
Cash per MZM money stock: $12.89 trillion (16.6%)
Total: $77.61 trillion

If you add in Households, Owners' equity in real estate, you add another $10.98 trillion for a total pie of $88.59 trillion, thus 43.6% to bonds, 29.4% to stocks, 14.6% to cash, and 12.4% to real estate.

From the perspective of the Talmud this allocation is very unwise because it is much too light on cash and owners' equity. The amounts allocated to business, to cash and to your homestead should each be about 33%, indicating that we are very heavily "risk on" indeed.

Food for thought.