US investor Ritholtz moves 100% into cash

With impeccable timing, the leading US market commentator and investor Barry Ritholtz moved 100% into cash earlier this week, but insists this is not the end of the cyclical bull market.

Ritholtz, CEO and director for equity research at Fusion IQ and author of the bestselling book Bailout Nation, has been hailed as the big winner of this week after moving all his investments into cash.  

'At the start of the year we had been around 30-40% in cash, and we moved to 100% this week. Some of our upside targets had been hit and we sold them to lock in profit, then  when I woke up on Wednesday I went all into cash so we could clarify what was going on. I just got lucky. I would like to take credit for it, but I'd be a liar,' he told Citywire.

He thinks in the next few days there will probably be a 'snap back rally,' but he is currently looking for shorting opportunities. 'We want to see a short rally so we can find more shorts,' he said.

Even though he thinks there is significant downside risk in the coming weeks and months, Ritholtz does not think this is the end of the cyclical bull rally seen in the last year.

'We’ve been talking about this market as a secular bear market that started in March 2000, and they generally run from 12-15 years. Since March, this has been a cyclical bull market rally during the longer secular bear market.

'Every bear market ends and every bull market ends. I'm not sure what we are seeing at the moment is the 30% correction that comes at the end of a bull market.'

He thinks the debt crisis is not restricted to Europe, and thinks US states such as Florida and California could face similar problems to Greece.

'More than half the states here are running deficits, and the deficits in Florida and California dwarf those in Greece,' he said, highlight huge pension liability requirements and taxes which remain far too loe. 

'People are too quick to blame governments. Typically, people get the governments they deserve. In California the voters said they can't raise property tax ever, for example, yet they continued spending. That situation ends in default. There needs to be a major recognition among people in the US, that there is no free lunch.'

Ritholtz, whose blog is widely read among the investment community in the US and Europe, 'we will eventually probably see some federal loan guarantees to stop these states collapsing, that’s my guess.'