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Here's One Major Sign That Markets Can Run Even Higher, According to the Head of the World's Biggest Money Manager

Larry Fink, chief executive officer of BlackRock Inc., explains why markets still have higher to run. Bloomberg via Getty Images

Though stock market investors have already made quite the killing in 2018, BlackRock CEO Larry Fink points to one indicator that gives him hope for further growth.

“We don’t talk about the pool of money that’s still sitting here,” he told Bloomberg at the World Economic Forum in Davos, Switzerland Thursday. “Financial markets are up three times now since the financial crisis, and the pool of money that’s sitting worldwide has never been greater.”

That comes as markets worldwide appear to be extending their gains from last year. The U.S. stock market, as measured by the S&P 500, has risen 5.5% since the start of 2018 and the Dow Jones industrial average has risen 6.5% to over 26,400 in the same period. A similar trend can be seen globally, with the iShares MSCI World ETF up about 6% so far this year.

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According to a recent BlackRock survey, 58% of Americans still hold their investable assets in cash, rather than placing them in the stock market or other investments. Fink also estimates that 45% of disposable income in China rests in bank accounts.

BlackRock President Rob Kapito said in December that some $70 trillion in savings is still sitting on the sidelines worldwide.

“That’s one of the reasons I think we have more momentum, because of the pool of money that’s sitting around,” Fink said Thursday. “Can you imagine the type of inclusion we would have worldwide if we had better financial literacy, we had more people investing over the long run, the type of financial gains people would have in their 401(K) or IRA?”

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