- Barron’s – Barron’s Big Money Poll: Managers Cling to Bullish Views
Top money managers in our exclusive survey remain solidly optimistic. Their views on tax reform, sectors, the dollar, and Trump’s tweets.
As the bull market charges through its ninth year, the feats keep on coming. The Standard & Poor’s 500 index has closed at a record high 44 times in 2017, while the Nasdaq Composite has notched 57 records of its own. But with each step higher, the inevitable fall feels a little more dangerous. And so, the anxiety mounts: What happens next? Barron’s has been posing that question, and many others, to top money managers and financial advisors for more than 20 years in our semi-annual Big Money Poll. This year’s survey drew responses from 140 managers across the country, including those at billion-dollar pension plans and smaller concerns. The latest results land at a time when investors have an extra reason to think about risk: Thursday marks the 30th anniversary of the worst one-day selloff in stock market history. On Oct. 19, 1987, the Dow Jones Industrial Average plummeted 23%.
Comment
The chart above shows that only 4% of big money managers think the stock market is undervalued. This is at least a 10-year low in this survey. Conversely, 37% think stocks are overvalued, a percentage that was only surpassed once in the past 10 years (Q1 2017).
Yet given this outlook, 61% of big money managers are bullish and only 12% are bearish (left pie chart below).
In other words, big money managers are fully invested bears. When they are not willing to invest based on their convictions, this is how markets get to unsustainable levels.
This analysis does not suggest when such trends will reverse, but it does say the market is composed of fully invested bears that will not act on their convictions.