Post by chiangmai on Jun 5, 2021 5:19:24 GMT 7
A quote this morning from Bloomberg which says, "Institutional managers are reining in exposure. People are buying a lot more protection. Even flows to equity funds are slowing".
Which makes me feel even better still that I've gone so heavily into cash. The question is, where are markets headed? A couple of sound bites to help you decide:
"With equities hovering near the highest price-earnings ratios since the dot-com era, the market reflects what Chris Senyek calls a “perfection scenario,” where the economic outlook continues to improve, while inflation stays tame. That may limit future returns, he said".
One analyst thinks, "“Perfection is extremely difficult to attain,” Senyek, chief investment strategist at Wolfe Research, wrote in a note to clients earlier in the week. “We do believe that the next 10% move in U.S. equity markets is down, not up.”
Who is to say he is wrong?
Anecdotal evidence suggests the same, "It’s not just investor sentiment that’s starting to crack. Investors are voting with their portfolios. Last month, exposure to equity futures for asset managers slipped from April’s post-pandemic peak, while hedge-fund exposure retreated from a two-year high, data compiled by Barclays show. Meanwhile, inflows to equity funds declined to $18 billion, a third of the average pace seen in the previous two months.
And then of course there's inflation,
“Higher real rates and less ability to pass on higher prices would be a bad cocktail for multiples writ large,” Wilson wrote in a note. “Earnings revisions will not be able to offset that de-rating, leaving the overall market vulnerable to a 10-15% correction over the next six months.”
www.bloomberg.com/news/articles/2021-06-04/meme-stock-marauders-aside-the-average-s-p-500-bull-is-worried?srnd=premium-asia
More anecdotal info: the volatility of three of my remaining well regarded investment funds has increased sharply and all three have reduced their exposure to US markets in favor of Asian markets. I find that watching how respected Fund Managers behave, frequently provides clues and offers market insight.
Perhaps if you know the answer to this quandary, you'll let me know?
Which makes me feel even better still that I've gone so heavily into cash. The question is, where are markets headed? A couple of sound bites to help you decide:
"With equities hovering near the highest price-earnings ratios since the dot-com era, the market reflects what Chris Senyek calls a “perfection scenario,” where the economic outlook continues to improve, while inflation stays tame. That may limit future returns, he said".
One analyst thinks, "“Perfection is extremely difficult to attain,” Senyek, chief investment strategist at Wolfe Research, wrote in a note to clients earlier in the week. “We do believe that the next 10% move in U.S. equity markets is down, not up.”
Who is to say he is wrong?
Anecdotal evidence suggests the same, "It’s not just investor sentiment that’s starting to crack. Investors are voting with their portfolios. Last month, exposure to equity futures for asset managers slipped from April’s post-pandemic peak, while hedge-fund exposure retreated from a two-year high, data compiled by Barclays show. Meanwhile, inflows to equity funds declined to $18 billion, a third of the average pace seen in the previous two months.
And then of course there's inflation,
“Higher real rates and less ability to pass on higher prices would be a bad cocktail for multiples writ large,” Wilson wrote in a note. “Earnings revisions will not be able to offset that de-rating, leaving the overall market vulnerable to a 10-15% correction over the next six months.”
www.bloomberg.com/news/articles/2021-06-04/meme-stock-marauders-aside-the-average-s-p-500-bull-is-worried?srnd=premium-asia
More anecdotal info: the volatility of three of my remaining well regarded investment funds has increased sharply and all three have reduced their exposure to US markets in favor of Asian markets. I find that watching how respected Fund Managers behave, frequently provides clues and offers market insight.
Perhaps if you know the answer to this quandary, you'll let me know?
