Billions Are Leaving the Stock Market. What Now?

May 7, 2024

I'm Coy Wells for U.S. Money Reserve. Billions of dollars are being withdrawn from the stock market recently by pension funds, hedge funds and other traders. In 2023, this included $34 billion pension fund and pharmaceutical and medical technology giant Johnson and Johnson, which reduced its target stock allocation by four percentage points.

Analysts estimate a total of $191 billion was removed from the stock market by pension fund managers that year. Now, in 2024, analysts at Goldman Sachs estimate that pension funds will withdraw even more from the stock market, totaling in $325 billion, a more than 70% increase from 2023. This includes stocks held in the nation's largest public pension, the California Public Employee Retirement System, which has begun the process of moving $25 billion out of stocks according to the Wall Street Journal.

Outside of pensions, Bloomberg reports that in early April, hedge funds ramped up short positions in U.S. exchange traded funds at the fastest pace since 2022. This behavior from multiple parties, especially at this large of a level, could be a sign that major market participants are looking to protect their assets from risk.

In a phone interview with Bloomberg, Kathryn Rooney Vera, chief market strategist at StoneX Group, said, “In a world of high geopolitical risk, upside risks to commodity prices and upside risk to inflation. I think we have to be more conservative in our allocation.”

One conservative safe haven asset used by consumers and institutions alike is gold, and as money continues to be withdrawn from the stock market, demand for precious metals seems to be growing. An analysis by Citibank found that 83% of money managers have developed long term positions on gold.

To learn more about the benefits of owning physical gold at home or as part of your gold backed IRA, and to receive your free gold information kit, call U.S. Money Reserve and speak to one of our dedicated account executives today.


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