If you're like a lot of investors, you're jumping in and out of index funds as though some days it seems like the world is going to end and other days it seems like corporate profits in America are going to grow to the sky.
I can't imagine what would cause investors to adopt that kind of schizophrenic attitude towards equities but if, gun to my head, I had to come up with a reason, I'd say it might have something to do with Donald Trump passing massive corporate tax cuts and boosting government spending one minute and then threatening to start trade wars and promising to shove missiles up the asses of "gas killing animals" the next.
That's the kind of thing that makes people skittish and ETFs which promise intraday liquidity are just the type of vehicles that allow investors to day trade everything from the S&P to high yield debt to emerging market bonds.
As Goldman wrote in a note out Wednesday, "for the first time in 6 years, the volatility of the S&P has been greater than the volatility of the most shorted stocks, suggesting hedge funds are not making big changes to their positions on a daily basis, while investors that trade at the index level are rapidly changing their positioning" (click for hi rez):
That, Goldman says, means portfolio managers need to be keenly aware of "how much of their stocks are owned by passive funds", because those funds are creating a tail-wagging-the-dog dynamic thanks to the type of manic flows we saw in SPY and QQQ over the past two months during the intermittent bouts of market turmoil.
Well speaking of ETFs and passive flows, Larry Fink was on CNBC this morning following BlackRock's earnings beat and here's what he had to say:
You should be 100 percent in equities. We spend too much time talking about market timing. The key for investors is to stay in the market.
Depending on what he means in that bolded bit, it's hot garbage for obvious reasons. Warren Buffett was correct to note, in his annual grandpa letter, that bonds are more risky now than a lot of investors think, but that doesn't mean you should be "100% in equities" - you should never be 100% in anything.
To be fair, that's probably taken out of context - Larry might well mean that investors should absolutely (i.e. "100%") have some money in stocks despite recent turmoil because you never want to be at 0% in your equity allocation.
As far as where Larry thinks we are in the bull market, he's "not sure what inning we're in", but what he does claim to know is that the Trump tax cuts will "extend" a bull that's already quite long in the tooth.
But while you're buying equities hand over fist (preferably via a BlackRock fund), don't forget to not buy companies that don't contribute to society - because remember, Larry is one woke motherfucker, ok?!
Fink appeared on Squawk Box shortly after BlackRock reported first quarter earnings and revenue that beat estimates on Thursday morning.
As CNBC notes, AUM for BlackRock increased from Q4 to just over $6.3 trillion as of the end of March.