Global Equity Allocations Flash A Warning

A near record-high percentage of global fund managers stated in a recent survey that they were overweight equities. Institutional investors are mirroring the same enthusiasm for exposure to common stocks as their retail counterparts.

Our previous posts have documented the rampant investor complacency illustrated by a host of sentiment measures. We have also shared our concerns that market volatility will be greatly amplified by the current record levels of margin debt and call-option buying. Investors have never been so levered, in every sense of the word, during a time when the divergence of investor expectations from the underlying economic realities is at its greatest.

The result, in our opinion, is a very high-risk market environment. We discuss current market risks in the recently published March issue. We also provide an update on our views of major global markets and our current investment positions.

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