It’s Not Just Small Investors Taking Risks In This Market

It’s Not Just Small Investors Taking Risks In This Market
Andrew Rummer

about 3 years ago1 min

Mentioned in story

As surges in meme-based crypto tokens and struggling video-game retailers attest, there are plenty of small retail investors willing to take big gambles with their money at the moment. 

But a new report shows the pros are joining in too. A net 25% of respondents to Bank of America’s monthly survey of professional money managers said they’re currently taking on “higher than normal” risk with the assets they oversee – that’s an all-time high. 

And as the pros take a punt, they’re cutting cash holdings to the lowest level since 2013 – a warning sign for US stocks, if history is any guide.

Chart of fund manager cash holdings.

Take note of the horizontal red lines that Bank of America has added to that chart. They warn that S&P 500 has tended to drop after cash holdings slipped below the lower line and tended to gain after cash levels rose above the upper line. Will this time be different?

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