Bloomberg News

Volatility Too Much to Take as 42% Pick Cash: Chart of the Day

September 29, 2011

(GRAPHIC: COD_FLIGHT_TO_CASH_092911. CHART OF THE DAY. Size: 2C X 3.75in. (96.0 mm X 95.25 mm) Expected by 15:00.)

Sept. 29 (Bloomberg) -- Losses that have erased about $8.7 trillion from global equities this quarter are sending more investors into cash than any time in a year.

The CHART OF THE DAY shows the percentage of Bloomberg users in a poll who plan to raise holdings of cash, stocks, commodities and corporate bonds over the next six months. A record 42 percent of respondents said they are raising funds, up from 26 percent a year ago, while those boosting equities fell to 39 percent from 44 percent. The quarterly Bloomberg Global Poll of investors, analysts and traders began in July 2010.

“Investors are determined to protect their cash,” Lionel Mellul, a poll respondent and co-founder of New York-based Momentum Trading Partners, wrote in an e-mail. “I am totally aligned with this approach and would rather favor the safety first of the capital.”

Stocks worldwide are headed for their worst quarterly performance since the end of 2008 on concern Europe’s debt crisis will trigger a global recession. The MSCI All-Country World Index has lost 17 percent this quarter and trades at 11.8 times reported earnings, near the lowest level since March 2009. The Chicago Board Options Exchange Volatility Index closed at 48 on Aug. 8, the highest reading since March 9, 2009.

“My opinion on why this is happening is uncertainty, uncertainty, uncertainty,” Jay Wright, an Austin, Texas-based managing director at Samco Capital Markets Inc., wrote in an e- mail. “Most people are not concerned with the return on principal at this point. They are concerned about the return of principal.”

Investors are seeking safer assets even as the U.S. Federal Reserve last month pledged to keep rates near zero through mid- 2013. Treasuries returned 5.8 percent this quarter as of Sept. 27, on pace for the biggest advance since the three-month period that ended in December 2008, according to Bank of America Corp. data. U.S. government debt has gained 8.2 percent in 2011, poised for the best yearly performance since 2008.

--With assistance from Brendan Moynihan in Chicago. Editors: Chris Nagi, Nick Baker

-0- Sep/29/2011 15:47 GMT

To contact the reporter on this story: Nikolaj Gammeltoft in New York at

To contact the editor responsible for this story: Nick Baker at

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