In a note titled “Wall Street Proclaims the Death of Equities,” BofA Merrill Lynch strategist...


In a note titled “Wall Street Proclaims the Death of Equities,” BofA Merrill Lynch strategist Savita Subramanian says the average equity allocation is at 49.3%. This is the first it's been below 50 in nearly 15 years, which suggests that sell-side strategists are now more bearish on equities than they were at any point during the collapse of the tech bubble or the recent financial crisis. For many, including Subramanian, this bearish sentiment is a contrarian sign that a turnaround is near.

Comments (18)
  • bbro
    , contributor
    Comments (11216) | Send Message
     
    Sssh....don't tell the bears
    3 Jul 2012, 03:44 PM Reply Like
  • Dibber
    , contributor
    Comments (1375) | Send Message
     
    How do you know that equity allocation won't continue to drop as people continue to age and have less risk for equity risk? Just because it's below 50% doesn't mean it's going back up.
    3 Jul 2012, 04:07 PM Reply Like
  • Emerald
    , contributor
    Comments (2083) | Send Message
     
    Just wait a few years until interest rates rise and they start to buy stocks at the mid and high points. If not, they will really have no equity as their bond funds get crushed and CD's won't pay the rent.
    3 Jul 2012, 05:17 PM Reply Like
  • James Sands
    , contributor
    Comments (2635) | Send Message
     
    I AM ALL IN!!!!!!!!!! Once the market opens on Thursday I am betting the farm!!!!
    3 Jul 2012, 03:46 PM Reply Like
  • HarryWanger
    , contributor
    Comments (189) | Send Message
     
    Turnaround is near?? Stocks are barely off their HOY. That's not a turnaround. A turnaround would be dropping a couple hundred SPX points.
    3 Jul 2012, 03:47 PM Reply Like
  • James Sands
    , contributor
    Comments (2635) | Send Message
     
    Don't rationalize, just BUY!!!!!!!!!!!!!!
    3 Jul 2012, 03:56 PM Reply Like
  • GaltMachine
    , contributor
    Comments (2068) | Send Message
     
    All you have to do is look at the chart on the attached link and reach your own conclusions. What it shows that the use of an "average" anything when it comes to financial data masks a lot of real information.

     

    Especially since there are so many other competing ways to measure bullishness and bearishness that have track records and are systematic like Investors Intelligence - right now bullishness is about average.

     

    So when a guy who's job is to sell stocks say buy stocks you might want to question his motives.

     

    Just today for example on Mark Hulbert's Marketwatch column:

     

    http://bit.ly/R55NyW
    "Too many jumping on bullish bandwagon
    Commentary: Huge — and alarming — jump in bullishness"
    CHAPEL HILL, N.C. (MarketWatch) — An unusually large number of stock market timers spent the weekend jumping on the bullish bandwagon. And that’s worrisome from a contrarian point of view."

     

    So if your bullish stay bullish, if your bearish stay bearish. These tools are just sales tools to push a particular point of view.
    3 Jul 2012, 03:58 PM Reply Like
  • tunaman4u2
    , contributor
    Comments (3487) | Send Message
     
    Funny, marketwatch was just proclaiming a severe uptick in bullishness... Hulbert
    3 Jul 2012, 04:02 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    what wonderful news this is...

     

    E
    3 Jul 2012, 04:08 PM Reply Like
  • Wall Street Smart
    , contributor
    Comments (472) | Send Message
     
    The data would be skewed if they dont factor the equity derivatives. There is a huge uptick of option activities related to stocks in the US and we need to know if equity+equity derivative allocation is less than 50%
    3 Jul 2012, 04:12 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2860) | Send Message
     
    That's a very good point, and one I would like to see factored in.
    3 Jul 2012, 04:18 PM Reply Like
  • dc10
    , contributor
    Comments (222) | Send Message
     
    Can't we all just buy and hold. LOL
    3 Jul 2012, 04:22 PM Reply Like
  • James Sands
    , contributor
    Comments (2635) | Send Message
     
    To an extent, we just need to actively manage for the long-term. But we can still be long.
    3 Jul 2012, 05:11 PM Reply Like
  • Tack
    , contributor
    Comments (16262) | Send Message
     
    If somebody had bought and held an SPX index fund twenty years ago to the day, they'd be up 325% as of today's close, and that's not including a single dime of dividends, averaging over ~2.5% per annum, which equates on a compounded basis to another 64% in gains, for a grand total of 389% gain.

     

    Apparently, buying and holding can be quite rewarding over a longer time frame. Sure beats 1.7% yield on Treasury bonds.
    3 Jul 2012, 07:10 PM Reply Like
  • James Sands
    , contributor
    Comments (2635) | Send Message
     
    I would say that is a conservative return for 20 years. I'm looking to get in the thousands. But you are correct in stating there are long term passive methods still out there to be considered.
    3 Jul 2012, 07:16 PM Reply Like
  • Tack
    , contributor
    Comments (16262) | Send Message
     
    Lets:

     

    Yes, that's an 8.26% annual return, but that's 100% passively tracking the SPX and including a lengthy rather moribund period.
    3 Jul 2012, 07:24 PM Reply Like
  • James Sands
    , contributor
    Comments (2635) | Send Message
     
    Sorry, yea that is good, I'm thinking along the lines of individual returns, prior to aggregating them from a portfolio perspective.
    4 Jul 2012, 12:57 AM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    it is the paradox of investing that equities are only worth buying when everyone wants them less and only worth selling when everyone wants them exclusively.

     

    E
    4 Jul 2012, 05:54 AM Reply Like
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