Wednesday, March 29, 2017

Stock Market: Could Be Lumbering, Staggering, Stumbling, the near future. "Come on, Sebastian! The market hits new highs month-after-month," you yell. In a normal rally, you would be correct, Sir as Ed would say to Johnny on the late night show, but this is a rally of expectation and the P/E ratio's are getting some influential people nervous. Then, you add this little survey that I will share with you and you can better prepare. By the way, this survey was concluded after the last Fed rate hike.
This survey was conducted by Bank of America Merrill Lynch Global Fund Manager. The results show a record number of professional investors have concerns about the market. Speaking about the results of the survey, Michael Hartnett said,"34% of professionals, which is the most in 17 years, find the market overvalued. People are jumping in because they see gains and do not want to miss the move with little else to park their money."
Of course, if I was there, I would've suggested precious metals which are up 8% this year and with their money that could easily double, but outside of this blog, I am an unknown.
Anyway, Hartnett goes on to say, "There is also the new doubt that rising interest rates will make bonds look better and then, equities could take a hit. Investors feel that a rate of 3.5% on a 10-Year Treasury to be the inflection point."
The other aspect of this survey is cash. It is the most watched indicator in global investing. The inflection point here is if cash is below 4%, that equals greed. Buying is coming. If cash is above 5%, that equals fear. Selling and tightening is coming. At present, cash is 4.8%, and falling, but closer to tightening due to the high price of stocks.
So, if my brother, Sebastian is crazy, JFL says, "Crazy like a fox."