How much of $10 trillion will get the market going?

I came across this article in the LA Times by Tom Petruno where he reports that $10 trillion sitting in bank savings accounts, CDs, and money market funds.

Typically these accounts do earn only a paltry amount and if you take into account erosion from inflation and taxes, your return is usually a negative amount. This is actually a reported reason for the run-up in commodities. It isn't worth letting cash sit and lose money and so people are taking the risk in some of the commodities markets (such as oil and gold).

According to the Investment Company Institute, there was $3.339 trillion in money market funds (click here for that report). In reviewing the weekly flows in "long-term" funds, you can see that money is flowing out of equity funds and in to foreign equity funds and bond funds (click here for that chart).

My thought is that even though there has been a run-up in the equity markets and major indices, imagine what will happen if sentiment improves and the money starts to flow from money market funds and in to equity markets? If and when that happens, everybody needs to fasten their seat belts!

I couldn't find the article in the LA Times, but it is listed in an alternate website that you can read by clicking here. The main point of his article is to how to maximize the return of your idle cash.

For more information on the Investment Company Institute, click here.