I have recently been quite busy with other matters and I am sure that my lack of presents has been noticed somewhat. However, my focus returns back towards the blog in February, so I will be doing quite a few more posts than I normally have done in recent months. Expect quite a lot of material in coming weeks and months. Today, we start of with a recent update from Merrill Lynch Fund Managers Survey. I will include just some of the more important charts, because it would take too long to go through the whole thing. If you have any questions about other specifics covered in the survey, while not on the blog, just drop a comment and ask - I will be glad to answer it!
Source: Merrill Lynch
Merrill Lynch Fund Managers Survey, which surveyed an overall total of 254 panellists with $754bn AUM, in a period between 4th to 10th January 2013 showed that investors bullishness surged to extremes. The chart abodes shows that risk appetite is the second highest in surveys history. Current readings should be a worry for bulls, and they are just about everywhere these days. On previous two occasions of appetite reaching these extremes, in April 2010 and February 2011, the market eventually suffered a crash (flash crash and US debt downgrade respectively). Merrill Lynch summarises the mood by stating that:
"Investors enter 2013 as bullish as they have been in two years. Growth and risk metrics are at multi-year highs and, most glaringly, investors are OW bank stocks for the first time since 2007."
Chart 2: Managers see no need for market protection
Source: Merrill Lynch
Fund managers remain extremely bullish on the global economic prospects, especially when it comes to China. The survey writes:
"Growth optimism surged to a 33-month high. Optimism on Chinese growth remains robust. A net 63% expect a stronger Chinese economy over the next 12 months, the second highest reading on record."On the other hand, fund managers are taking “larger-than-normal” risk (shown in the Chart 1), while the number “taking out market protection” fell to the lowest reading since the survey question was introduced. Once again, similar readings were wittiness in April 2010 and February 2011, and eventually markets corrected meaningfully. Bulls better hope that economy and earnings picture really picks up to justify this much greed, otherwise a lot of investors might be in for a disappointment. I hold my doubts.