American pension funds preparing to liquidate positions?!
Information coming directly from Goldman Sachs' trading desk – and followers of the Hot Stock Alerts channel are the first to receive:
According to a Goldman Sachs analysis, American pension funds are expected to sell stocks worth approximately $19 billion by the end of the month (May).
This is an aggressive rebalancing of historical magnitude.
How unusual is it?
This sale ranks in the 89th percentile of all sales and purchases over the last three years.
Meaning: one of the largest sales.
Even with a broader historical perspective, since January 2000, we are talking about the 85th percentile.
In other words: this is a rare and impactful move even from a two-decade perspective.
And why is this happening now?
Pension funds perform at the end of each quarter or month a portfolio rebalancing – Rebalancing.
For example, at the peak of declines in previous months, we reported that we identified record purchases by pension funds, which pushed indices up on the rebalancing day.
The reason for this is that when stocks fall, their weight in the portfolio also decreases, and therefore funds buy more stocks to maintain balance.
And the opposite also happens: when we see a sharp and rapid rise in the market, the weight of stocks in the portfolio increases, and again pushes funds towards an aggressive selling rebalancing.
And this is exactly what is happening now.
The possible effects?
Leading indices on the last day of the month may experience increased volatility.