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Everyone Says Equities Are Overvalued, So They’re Piling In - from Bloomberg
The reporting over the past few weeks indicated that retail investors were still fully all-in with stocks, while the institutional guys were sitting on the sidelines.
If institutional investors are now piling into stocks, then we’ve got a “melt up”, until the big unwind.
"The reporting over the past few weeks indicated that retail investors were still fully all-in with stocks, while the institutional guys were sitting on the sidelines."
This is also what I've heard more or less.
"A record 91% of institutional investors say US equities are overvalued. But don’t watch what fund managers say, watch what they do, because they’re fully invested. Cash levels are near the bottom of historical levels over the past quarter-century."
If domestic equity valuations are near historically high levels, why are institutional investors still buying U.S. stocks? FOMO and/or potential job loss concerns? Don't fund managers have a fiduciary responsibility to a fund's investors?
Only guessing but fund managers are still just guys and guys don’t want to trail their peers. For lots of reasons. Including job security. Ultimately they are judged by their numbers and the numbers are judged relative to their peers.
I'd be willing to bet a good number of us HERE at MFO are indeed sitting on as much in the way of equities as we desire, at the moment. I'm not adding. That's ONE vote. I do reinvest dividends. In such a case, I'm using The House's money to gain a small advantage. "Free money from the sky." I'll take it. Currently: 53% stocks. 46% bonds.
I concur with @crash that we are also at a modest exposure to US stocks. Even though the emotion behind FOMO persists, bonds are more compelling for us. For once, our are over-weighing to oversea exposure on stocks and bonds have benefited our conservative portfolio.
Those opportunistic fund managers including Romick and Giurox excel under this volatile environment.
Interesting disconnect - companies have lowest cash reserves suggesting they’re fully invested but say the stock market is overvalued, while investor sentiment is bearish (see recent investor sentiment survey), and, then, of course there’s the political climate. *Same crap, different day?*
Trying to manage risk has kept me on edge. My wife and I, both in our 70s are now sitting on 20% in Mmkts, 20% in t-bills/notes, 10% in bond funds (HY, MS), 13% in stable value funds, and 37% in equity funds.
My assumption here is that these institutional guys believe hey can exit with some profit. I.e. - market goes up 10% and starts dropping, they get out with a 5% profit, versus only a couple percent in bonds/cash. The little guys stand pat and get walloped as the rug gets pulled out.
Comments
If institutional investors are now piling into stocks, then we’ve got a “melt up”, until the big unwind.
You'll see.
while the institutional guys were sitting on the sidelines."
This is also what I've heard more or less.
"A record 91% of institutional investors say US equities are overvalued.
But don’t watch what fund managers say, watch what they do, because they’re fully invested.
Cash levels are near the bottom of historical levels over the past quarter-century."
If domestic equity valuations are near historically high levels,
why are institutional investors still buying U.S. stocks?
FOMO and/or potential job loss concerns?
Don't fund managers have a fiduciary responsibility to a fund's investors?
Currently: 53% stocks.
46% bonds.
Those opportunistic fund managers including Romick and Giurox excel under this volatile environment.
Trying to manage risk has kept me on edge. My wife and I, both in our 70s are now sitting on 20% in Mmkts, 20% in t-bills/notes, 10% in bond funds (HY, MS), 13% in stable value funds, and 37% in equity funds.
I wish I were more Alfred E. Newman-like.
"I wish I were more Alfred E. Newman-like."