Bulls running wild — so when's the correction?

JAN 20, 2013
Global growth expectations and risk appetite among global fund managers are at the highest level they've been in almost two years, making a market correction this quarter likely. Global fund managers expect the global economy to grow at around 2% over the next 12 months, the highest growth projections in almost two years, according to the latest Bank of America Merrill Lynch Global Fund Manager Survey. The 254 managers surveyed, who manage approximately $754 billion combined, also are taking on the most risk since 2004. Almost 80% said they're taking on more risk than normal.

MANAGERS HOLDING BANK STOCKS

The most telling sign of bullishness can be seen in how the global managers view bank stocks. For the first time since 2007, managers are overweight global banks, the survey found. The global fund managers aren't the only ones feeling bullish this month. Investors poured $18 billion into stock mutual funds and exchange-traded funds in the second week of January, according to Lipper Inc. It was the most net new cash deposited into stock funds since mid-2008, and the $7.5 billion that went into stock mutual funds was the most since 2001. The numbers actually are probably much higher, since stock fund bigwigs such as The Vanguard Group Inc., Fidelity Investments and American Funds don't report weekly flows to Lipper.

"DIP WOULD BE HEALTHY'

Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, isn't ready to join in the fanfare surrounding stocks. “Bullish sentiment doesn't guarantee a correction, but market vulnerability has certainly risen,” he said in a statement. “In our view, a dip in equities in January would be healthy. Without one, a larger correction in the first quarter becomes more likely.” The global fund managers are still wary of the fiscal situation in the U.S. More than 40% ranked it as the biggest tail risk the markets face today, ahead of the problems in the European Union and China's growth. [email protected] Twitter: @jasonkephart

Latest News

Americans back sharing AI wealth as debate over industry’s economic benefits grows
Americans back sharing AI wealth as debate over industry’s economic benefits grows

Public support grows for policies that spread AI’s financial gains beyond tech companies.

JPMorgan's record Q2 profit rides trading and dealmaking surge
JPMorgan's record Q2 profit rides trading and dealmaking surge

Investment banking fees rose 30% on a wave of IPOs and megadeals, led by the largest public listing on record.

Feathery raises $30 million to power AI-driven RIA operations
Feathery raises $30 million to power AI-driven RIA operations

Series A funding from Portage, Bain Capital, and other investors will fuel data tools designed to speed advisor transitions and cut onboarding delays across wealth firms.

Wealth Enhancement deepens East Coast presence with Wealthshield deal
Wealth Enhancement deepens East Coast presence with Wealthshield deal

The Minneapolis-based RIA aggregator is adding two North Carolina practices managing nearly $1 billion, pushing its total client assets past $158.2 billion.

The real reason I expanded my RIA to Hong Kong (it wasn't for the AUM)
The real reason I expanded my RIA to Hong Kong (it wasn't for the AUM)

As markets disintegrate, the value of on-the-ground, first-hand research through "intimate knowledge acquisition" is skyrocketing.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income