Moving to 100% cash

Well-known market follower Barry Ritholtz moves to an all-cash position -- and just in time.

By Kim Peterson May 6, 2010 3:03PM
Bear © Stockbyte/PhotolibrarySmart move, Barry Ritholtz.

Wednesday, a day before the U.S. stock market took a steep dive, money manager Ritholtz announced that he had gone 100% cash. "We have no positions long or short," he wrote on his blog, The Big Picture. "We are actively looking for shorts."

Certainly he's not alone. Investors everywhere have been seizing on any news to jump ship. But Ritholtz is a well-known market watcher, and when he does something as dramatic as this people are sure to notice.

Early Thursday morning, he explained the reasoning behind his move. It had nothing to do with the crisis in Europe, he said. This was strictly a technical call based on market internals, sentiment, volume and other factors.

Ritholtz is the chief executive of Fusion IQ, a market research firm. He also wrote the book "Bailout Nation."

"Ideally, if we get lucky, we will see a rally over the next week, with deteriorating characteristics — that sets up a better entry for shorting new positions," he writes.

Earlier in the week, Ritholtz began to sense that the market was in more than just a run-of-the-mill correction. Heading into 2010, he writes, he was about 30% cash. By the time April rolled around, he raised that to 50%.

"I still expect a 25% correction at the end of this rally," he wrote Wednesday. "I am unable to say with any degree of conviction that the current market turmoil is that major move down."

I imagine he might have more to say on this after Thursday's dramatic market plunge.

"In addition to being very smart, he also has chops as a market timer, having been bearish before the big crash, and bullish at the bottom," writes Business Insider about Ritholtz.
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[BRIEFING.COM] S&P futures vs fair value: -6.60. Nasdaq futures vs fair value: -14.50. The S&P 500 futures trade seven points below fair value.

Markets across most of Asia ended on a lower note, while Japan's Nikkei was closed for Autumn Equinox.

  • Economic data was limited: 
    • China's HSBC Manufacturing PMI ticked up to 50.5 from 50.2 (expected 50.0) 
    • Singapore's CPI eased to 0.9% year-over-year (expected 1.2%; previous ... More


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