The first chart below shows the consensus recommended equity allocation from Wall Street strategists going back to 1997. As shown, strategists completely missed the turn in equities in early 2000, as they increased their recommended stock allocation all the way into mid-2001 when the market was well off of its highs. Analysts were loathe to acknowledge the bull market from 2002 to 2007 as their recommended stock allocation trended lower all the way into early 2006. It wasn't until the last leg of the bull market that analysts as a whole finally started increasing their recommended stock allocation.
The consensus did begin to turn negative on stocks a little before the market's peak in October 2007, and then they threw stocks out the window on a weekly basis all the way until May 15th of this year. On May 15th, the consensus recommended stock allocation hit 51.3%, which was the lowest level in more than a decade. By that point, the S&P 500 had already rallied 30% from its low two months earlier. Since May 15th, the recommended allocation has risen to 55.6%, which is the highest level since December 2008, but it's still below the 57.9% level it was at just before the Lehman bankruptcy.
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