Stocks are overvalued however they’ve room to maintain rising anyway.
That’s the takeaway from the most recent Bank of America month-to-month fund supervisor survey, which finds a internet 78 per cent quantity see stocks as overvalued – a file quantity that even exceeds readings seen in the course of the late 1990s know-how bubble.
However valuation issues haven’t stopped managers dashing again into equities, with cash ranges sinking from 5.7 to 4.7 per cent, the most important drop since August 2009. Equally, hedge fund fairness publicity has soared to its highest stage since September 2018, whereas fears of extended recession have halved.
So has irrational exuberance taken maintain? No. A majority say it is a bear market rally, not a brand new bull market. Solely 18 per cent count on a V-shaped restoration. The bank’s Bull and Bear Indicator remains to be in bear territory, suggesting sentiment stays muted.
In brief, Wall Street is previous “peak pessimism” however latest optimism is “fragile, neurotic, nowhere near dangerously bullish”. The ache commerce is for stocks to maintain going increased.