Chet Currier at Bloomberg.com notes that three top portfolio managers find little to like in the equity market. Currier finds it interesting that these managers are preaching caution (and holding significant amounts of cash), while the mass of equity fund managers have let their cash holdings drift down to the lowest levels in quite some time.
So the wariness of top fund managers right now can’t readily be used as a contrarian indicator to buttress the bullish argument for stocks. Instead, it looks as though those star money managers are themselves the contrarians.
That’s a sobering point to ponder, especially for stock- market bulls such as the author of this column. By its very nature, the market usually does whatever it must to discredit the majority view.
Indeed this buildup in cash is the reason why one research group has become more bullish on the market.
John Spence at Marketwatch.com reports that high liquidity is setting the stage for a 20% rise in the U.S. equity markets. A TrimTabs Investment Research reports that a combination of better valuations, high cash levels at corporations, stock buybacks, and insider buying all point to better times ahead for the market.
Asset allocators are also taking note. Sara Turner at Marketwatch.com reports that asset allocators are becoming more positive towards U.S. equities. A Merrill Lynch survey shows that as their opinion of the dollar has become more positive, so has their confidence in the U.S. equity markets.
There is a something for everyone in these reports. Oftentimes the hardes thing to do is to challenge your current thinking. Read those items that disagree with your thinking in the hope of creating a more sound investment thesis.