All Of A Sudden, This Is The Most Crowded Trade

All Of A Sudden, This Is The Most Crowded Trade
Theodora Lee Joseph, CFA

8 months ago1 min

It’s always helpful to find out what the so-called smart money, or fund managers, are seeing. Investing is their full-time job, after all, and they spend a lot of time watching where the money is moving. That’s why the Bank of America monthly Global Fund Manager Survey is always so interesting.

The latest survey shows what the group considered to be the most-crowded trades in early April (dark blue bars), compared to early March (light blue). And if this tells you anything, it’s that investors weren’t happy in April with the assets they liked the month before. Instead, they’d rushed to buy up stocks (i.e. take long positions) in Big Tech, and flocked toward short positions in US banks and REITs. And that’s probably unsurprising considering all the worries that Silicon Valley Bank and Credit Suisse sparked in March, and the potential crash in the US and European commercial real estate market. Chinese stocks remained a favorite in early April, but some of the shine had certainly worn off on European stocks and the US dollar.

With earnings season unfolding now, and with Netflix reporting a disappointing set of results, those Big Tech stocks that everyone’s been grabbing could be in for a wild ride, with downside risks. Sure, artificial intelligence (AI) innovations have been making a lot of headlines lately, and that may eventually be a boon for these giants, but the impact may not hit these companies’ bottom lines for years. And in the meantime, several indicators are waving red for the stock market, so you may just want to be a little cautious.



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