Friday, 18 March 2005

Bullish consensus?

A Merrill Lynch survey finds that fund managers opt for equities.

The latest monthly Merrill Lynch survey of fund managers shows a net 59 per cent of participants are overweight in equities -- the highest figure since Merrill began the survey in 1999.

There was a corresponding bearishness about bonds, with a net 57 per cent of managers being underweight in this asset class. For the first time since June, managers expect the global economy to strengthen over the next 12 months rather than weaken...

David Bowers, chief global investment strategist at Merrill Lynch, said: "... This is as consensus as it gets and begs the question of who the marginal buyer of equities is going to be in future."

Well, we have not seen the shoeshine boys and cab drivers make their appearances in the market in a big way yet.

But I suspect we probably won't -- not in this market cycle. Unlike during the Internet boom, this bull market does not have a "new economy" aura about it. Bubbles -- assuming they are bubbles -- are appearing in dull and old asset classes like housing and commodities, not in sexy stuff like dot.coms and high tech.

So yes, David Bowers may be right. This may be as consensus as it gets.

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