Politics has everyone in a tizzy despite the dwindling uncertainty of the US presidential election, interest rates continue to be either teensy weensy or negative, and the S&P 500 is still within a rounding error of its all-time highs.

Mohammed El Erian, the Allianz strategist who used to be co-brain at Pimco with Bill Gross, says he has gone to 30% cash, and he has also noted that neither Trump nor Clinton is likely to be good for stocks — which is probably true at this point, though expecting a new president to somehow change the trajectory of the stock market is laying it on a little thick, we always impart far more credit and blame on Presidents than they probably deserve (despite how much everyone claims to hate gridlock and government’s failure to do something, what Wall Street really hates is change — if laws and regulations would just stay the same forever then analysts and CEOs wouldn’t have to worry about “regulatory risk” anymore).

My take? The economy is growing slowly, with serious structural debt problems, and the stock market is pretty richly valued… there is potential for real economic weakness under the surface, but many economic indicators are currently on a “things are not so bad” track, including the gauges of sentiment in both the manufacturing and service economies (the ISM surveys)… so there’s surely no guarantee that we’re going to have a crash and a recession next year.

That doesn’t mean that stocks can’t go up 50% next year, either, they absolutely can… particularly because there’s still so much cash that’s “sitting on the sidelines” and because pessimism is relatively high, fueled in part by negative interest rates and Fed fears and by overwhelming fearmongering about the election. And, lest we forget, because interest rates are almost certainly still going to be at super-low levels a year from now, even if they do go a bit higher than they are today.

So I think the odds are perhaps less in our favor, and I’d rather hold some cash and look for some weakness to buy cheap stocks… but this trepidation that’s basically built on the feeling that “this bull market is getting old” and “the Fed can’t prop stuff up forever” has been with us for a long time. I would have expressed a very similar sentiment a year ago, and a year ...