Last Time This Happened...

FUND MANAGERS SURVEY

There is a great deal of information in the blurb below from Yahoo Finance:

“Bank of America’s latest survey of fund managers with $745 billion in assets under management was conducted on Dec. 6 to Dec. 12, when it became clear a phase one trade with China would be inked. Cash levels in December as a percentage of their portfolios are at the lowest level since March 2013. The allocation to global equities surged 10 percentage points from November to 31% overweight, the highest level in a year.”

The fresh data above gives us two historical reference points similar to what we have in December 2019: (a) March 2013, and (b) about a year ago.

LOWEST FUND CASH LEVELS SINCE MARCH 2013

Was March 2013 a good time or bad time to be in the stock market? Given the S&P 500 gained over 30% and the rally lasted over two years, the answer is a good time to be in the stock market.

HIGHEST FUND ALLOCATION TO STOCKS IN ABOUT A YEAR

One year ago, the stock market was dealing with an unfriendly Federal Reserve and concerns about the trade war. While there were still some ugly days to come, walking forward from December 17, 2018, the Fed flipped the script after significantly altering their message to market participants on January 4, 2019. Stocks have performed well using “about a year ago” as a reference point.

PART OF THE WEIGHT OF THE EVIDENCE

Several recent data points align with the data above and are relevant from a weight of the evidence perspective:

• Investors Run From Stocks At Record Pace

• Rare Equity Fund Outflows

• Investor Cash Balances Could Push Stocks Higher