Institutional And Retail Investors Share The Same Enthusiasm For Stocks

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 our risk calculations at length in the February issue. We also update our views on global markets, our current investment positions, and our methods to optimize risk/reward.

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