Mixed signals

According to BofA’s December Global Fund Manager Survey: Investors are holding just 3.3% of portfolios in cash, the lowest ever.

Allocations to stocks and commodities are at highest since Feb 2022, reflecting strong optimism. Historically, such low cash levels often precede weaker equity performance.

BofA advises:
Buy stocks when cash ≥ 5%
Sell stocks when cash < 4% (we’re well below that)

Savita Subramanian, BofA’s US Equity & Quant Strategy head, notes:
“Liquidity is likely as good as it gets in 2025.”

Fewer interest rate cuts expected in 2026.
Government stimulus may fade as US debt-to-GDP hits high levels. Tech remains the most favored sector, and fund managers are most overweight equities since Dec 2024.

Bottom line: Markets are richly priced, and investor optimism may be peaking.

Sincerely,

Pele23

Posted Using INLEO