over 3 years ago • 2 mins
According to Bank of America’s (BoA’s) latest investor survey, too much money has been thrown at stocks, and they’ve actually – whisper it – become a bit of a rip-off 🤫
BoA surveys professional investors every month to see what they’re up to. And in June, the bank duly asked 190 investment managers – who collectively look after $560 billion worth of assets – how they’re feeling about the markets. Almost 80% of those surveyed – the biggest proportion ever – said they reckon the stock market’s currently “overvalued”. In other words, the investors think share prices are too high given expectations for company earnings.
Over half the investors also said they think the current stock market rally – which has seen global stock markets rise over 30% from their March lows – is a “bear market rally”. That’s where stocks rise in the short-term before collapsing back into bear market territory and plumbing new lows 🐻
It was just this week that Morgan Stanley backed a “V-shaped” economic recovery, but less than 20% of surveyed investors agree. Almost two-thirds reckon any recovery will be more gradual, suggesting a U or W shape. And that’s reflected in their stock choices over the last month: they reduced their holdings of tech and pharma stocks – some of which have benefited from the pandemic – and added “early cyclical” sectors like materials and energy 📊
The investors said they’d put more money into markets over the last month, reducing the amount of cash they had by 5% – the biggest monthly drop in over a decade. Among those who spent the most were pension funds, which consistently have to pay retirees at the expense of their cash pile 💵 They can’t necessarily afford to miss out on a rising stock market if they want to keep payments flowing – no matter how risky the market might be.
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