S&P 500 Doubled Cash Returns Since 2022
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Money market funds held approximately $8.25 trillion as of the end of February, an all-time record high and a sharp jump from roughly $5 trillion in 2022, as investors moved to cash for safety amid falling stocks and bonds.
- The S&P 500 delivered a 42% total return from the start of 2022 through the article's writing, more than doubling the Vanguard Federal Money Market Fund's 18% return over the same period.
- The S&P 500 has weathered a 20%+ drop in 2022, a nearly 20% decline about a year ago, and is currently about 8% off its high, yet still outperformed cash by a wide margin.
- The Iran conflict has pushed oil prices to their highest level since 2022 and is identified as the main short-term catalyst keeping stocks under pressure.
- The market has priced out virtually any possibility of a rate cut this year, and the U.S. economy is slowing with a labor market struggling to generate consistent job growth.
- The article argues that investors moving to cash must be right twice — exiting before further downside and re-entering at lower prices — a discipline most investors, even professionals, lack, making the move-to-cash strategy typically a mistake.
Why it matters: The $8.25 trillion parked in money market funds represents a 65% increase from 2022 levels, and those dollars are foregoing the 42% S&P 500 gain that occurred over that same period. For individual investors, the article makes a concrete case that reacting to the Iran-driven volatility and current correction by locking in losses in cash typically damages long-term returns more than the drawdown itself does.
Ask SkimNews
