tl;dr
A recent Bank of America survey found that over 90% of fund managers believe the US stock market is overvalued, the highest level since 2001. Investor allocations to foreign markets have increased to their highest since February, suggesting a shift away from the US. BofA strategist Michael Hartnett ...
According to a recent Bank of America survey, over 90% of fund share managers believe the US stock market is overvalued, marking a new high since 2001. This sentiment was highlighted in a Bloomberg report showing that 91% of polled fund managers perceive US stocks as overpriced, reflecting growing concerns about market sustainability.
The survey also revealed a notable increase in investor allocation toward foreign markets, reaching its highest level since February, indicating a possible shift in sentiment away from the US. BofA strategist Michael Hartnett cautioned that the ongoing stock market rally might risk transforming into a bubble, especially as cash holdings relative to total assets stand at 3.9%, a historically significant threshold preceding market sell-offs.
In contrast to US stocks, emerging market equities are viewed more favorably, with a net 49% of respondents considering them undervalued — the strongest optimism since early 2024. When it comes to popular investment positions, fund managers identified long positions in the Magnificent 7 stocks, short positions against the US dollar, and long positions in gold as the most crowded trades.
The survey also outlined several major risks threatening markets, including the possibility of a recession triggered by trade wars, persistently high inflation that could hinder Federal Reserve rate cuts, a disorderly surge in bond yields, a potential bubble in AI-related equities, and the debasement of the US dollar.