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In your opinion, which one of the following, if any, is the biggest issue facing the country today?
"Investors are surprisingly risk-hungry," Suzanne Duncan says. "Reading between the lines, they are hoping they can generate enough money to withstand the effects of the two top issues that are keeping them up at night: rising healthcare and energy costs. We think that investors are willing to take on more risk to generate greater returns in the long run."
What's different about this crash?
After the majority of crashes in the past, large institutions mainly in the U.S. and Europe—not individual investors—stepped in to invest and restore confidence.
But this time around, these institutions are sitting on the sidelines, stockpiling cash to record levels. According to a Merrill Lynch fund manager survey, managers as of February were overweight in cash for the first time since 9/11.1 Rather, it is institutions and sovereign funds in the oil-rich Middle East and cash-rich Asian governments who are coming forward, having pumped over US$60 billion thus far into financial firms.
So it is an unlikely pairing of the "man-on-the-street" investor and the 800-pound gorilla sovereign funds that may be rescuing the markets.
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