Over the last year – June, October, March – we experienced massive equity market selloffs. Mom and Pop got wiped out, while the whales of Wall Street came out in force to buy, buy, buy. That selloff fostered a dramatic uptick in institutional buying.
Passive investment funds – like ETFs – grew bigger. That includes the asset base of BlackRock, State Street, and Vanguard, which generates fees from ETFs and don’t give a collective damn about the short-term movements in the markets.
Now that crazy fiscal policy has turned the taps back on, a flood of liquidity has stretched valuations almost to pre-pandemic levels. Buyers continue to build positions as fiscal spending hits overdrive.
Institutions, though, are building even bigger positions. You’d better believe it.
The post first appeared on Money Morning.