If it’s contrarian “sell” signals you’re after, you could do a lot worse than professional investor sentiment.
Let me back up, though. You shouldn’t be after “signals” in the first place. That suggests you’re trying to time the market. That’s a fool’s errand. You’ll fail most of the time, which is to say pretty much all of the time. Buy and hold. Buy. And. Hold. Anybody who tells you any different is almost surely trying to fleece you.
With that crucial disclaimer, those of you hell-bent on the notion that investing’s a “game” and that you can “play” it better than the next guy or gal will be interested to know that optimism among those guys and gals rose by the most in more than four years this month, according to the October installment of BofA’s Global Fund Manager survey.
The chart shows a composite metric which rolls up cash levels, equity allocations and growth expectations from people who allegedly know what they’re doing (i.e., “professionals”).
That reading — 5.6 — isn’t especially high in “level” terms. It’s the month-to-month change (the jump from 3.8 to 5.6) that stuck out. BofA’s Michael Hartnett cited Fed cuts and China stimmy.
The component breakdown shows a huge leap in growth expectations. The figure below, from the survey, gives you some context.
Hartnett engaged in a bit of helpful editorializing. “Global growth expectations rose from -47% to -10%, the fifth largest jump since 1994,” he wrote.
That came courtesy not just of the Fed’s 50bps cut and China’s ongoing stimulus rollout, but also September’s blockbuster US jobs report, the survey indicated.
If you’re wondering, “hard landing” expectations among FMS panelists fell to just 8%.
The red line’s only been lower on two other occasions. “No landing” expectations doubled to 14%. “Soft landing” remains the overwhelming consensus.
So, the smart money just evidenced a two-standard deviation increase in growth expectations and the same panel of professionals see virtually no chance of a global recession.
SELL!!!!!
I’m joking. Unless stocks fall. In which case I was serious. Either way: Not investment advice.
Regarding yesterday’s Trump and I, biologists believe that we have an altruistic gene. Darwin would say that trying to help or save others is conducive to passing on one’s genes, regardless of whether one intends to do so. So there you have it, H, we’re all human unless some kind of psychosis overwhelms.
In an unrelated survey, drinking rates in the US is spiking (click bait keyword). As a loyal reader, I vividly remember the very first monthly letter.