By David Schawel, CFA, Economic Musings
As Q3 2013 begins and markets remain volatile, I decided to reach out to a number of market participants to get their thoughts on this upcoming quarter.
Instead of asking, what will the S&P do, or where will the 10yr end up, I posed a very different hypothetical question:
“Pretend you have the choice of owning the S&P 500, the 10yr UST, or cash for the entire 3Q. You may not rebalance, and must hold for the entire quarter. You can hold “3 units”, so you can choose to hold 3 S&P, 3 Cash, or any combination that adds up to three.”
The 20 participants I asked are what I would consider “Smart Money” and come from a broad range of backgrounds in the money management universe.
Results: The results were somewhat surprising to me. All else equal I was surprised that cash was the highest allocation despite the recent volatility. Given the recent selloff in the bond market, I was surprised that allocation to 10yr UST’s was nearly identical to Spoos.
Although there are a lot of shortcomings to this survey, I thought it sheds some interesting light on what various money managers are thinking as we head into 3Q.
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