Real GDP was unrevised at a 33.1% annual growth rate in Q3 – while this is great news in and of itself, the real news (as often is the case) was buried in the fine print – economy-wide corporate profits soared in the third quarter, rising 27.1% and hitting an all-time record high, even higher than pre-COVID-19 levels. Profits were up 3.3% versus a year ago.

This is important as it’s further evidence that stocks are still relatively cheap. Certainly not ‘grossly over-valued’ as the plethora of perma-bears (whom seem to dominate the airwaves) would have you believe. That said, with broadly improving economic data as a backdrop, investors have rarely been this flush with cash. Contending with the most economic uncertainty in decades and a frightening stretch of volatility, many investors have rushed into money-market funds (cash). Assets in the funds recently swelled to about $4.6 trillion USD, the highest level on record, according to the Federal Reserve. Assets in money-market funds are one, but not the only, measure of cash holdings, and investors have socked away cash in other places, too. Other measures, like bank deposits, are also at a high.

Few can agree on what the giant pile of cash means for markets. Despite a an equally powerful rally off the March lows, overall stock positioning remains among the lowest levels of the past decade, according to data from a recent Deutsche Bank research note.

With all this good news, the election settled, and record cash (read buying power) on the sidelines, it pays to have some perspective…