Home Stock Opinion: Are you smarter than a fund manager? (Most likely, yes)

Opinion: Are you smarter than a fund manager? (Most likely, yes)


Don’t you wish your 401 (k) was run by the very well-paid geniuses who manage large institutional retirement funds?

Me neither.

Earlier last year, when stock markets collapsed and stocks everywhere were sold off like fire, the big money crowd cut customer exposure to stocks to near record lows.

After all, who wants to own risky stocks when the price is low?

Today, with the stock market indices through the roof, the same institutional managers have withdrawn customers’ money into stocks, great time.

“Investors continue to take more risks with their net OW (“ overweight ”) ratio for stocks rising slightly to near an all-time high of 62%,” according to the survey’s report. The latest Bank of America global fund manager.

The net 21% told Bank of America “they are now taking a higher than normal level of risk” in their portfolios. (Ahem. “Higher than usual? “What? Survey data shows their risk positions close to their 20-year highs.)

In other words: Sell low, buy high! Genius! What could happen?

The bank’s investment management arm surveyed more than 200 top currency managers around the world, overall managing more than $ 600 billion in assets.

In May of last year, only 10% of big money managers predicted a quick, “V” recovery. Today, after the national unemployment rate has fallen, that number has risen to 50%. If only we poor people trying to manage their own portfolios, without the benefit of powerful economic forecasting departments, could have access to this kind of brilliance!

A year ago, the big money managers also said that stocks of large companies would be a much better investment than stocks of small companies.

Over the past 12 months, the S&P 500 index
SPX,
+ 1.15%

Large corporate stocks outperform the Russell 2000 index
RUT,
+ 1.51%

of small-cap stocks is … uh … 40 percentage points.

Professor.

It is true these people are not always wrong about everything. On the other hand, no ordinary Joe or Jane really needs to envy them of their understanding. The average big money manager is more concerned with not getting fired or not being sued. Instead of “MBA” or “CFA” after their name, many of these people should have the letters “CYA”.

Among their latest forecasts, money managers now tell Bank of America they are expecting higher inflation and higher interest rates ahead. But they are still optimistic. Only 7% believe that US stocks are in a “bubble” situation. More of them are bullish on bitcoin this year than long-term treasury bonds.

Their favorite stock market sectors include banks, industrial stocks, and “discretionary” companies.

Their favorites are the areas of defense, utility and consumer staples.

They tend to appreciate more for US stocks this year than other major assets such as bonds, gold or emerging market stocks. Their least-loved stock markets around the world are London and Tokyo.

Meanwhile, they predict that small-cap stocks will beat big companies over the next 12 months.

If this makes you want to own UK stock
FLGB,
+ 0.45%

Japanese stocks
FLJP,
+ 0.68%
,
Cash and bonds, and running from stocks of small companies, you’re probably not alone.

Either way, if you feel like these guys have a secret side, you can rest easy.

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