I’ve posted Podcast #103 to the “RobCasts” section of the site. It’s called Cash on the Sidelines Often Disappears Into Nothingness.
“Experts” will often try to persuade you that stock prices are going up because there is so much cash waiting on the sidelines. The fact that prices have gone down does NOT mean that money has been taken out of stocks and is being stored for a time in money market accounts. When stocks are overvalued, prices can go down without the money going anywhere; it just goes “poof!”. This is one of the reasons why you need to be cautious investing in stocks at times of extreme overvaluation.