It seems like I see one of these calls every week, yet none have had any effect. Here’s today’s (via Briefing.com):
09:06 ET Morgan Stanley increases cash allocation
Morgan Stanley shifts 5% out of both bonds and stocks into cash, which leaves their new asset allocation at 65% stocks, 20% bonds, and 15% cash; firm believes the recent powerful rallies have materially lowered expected returns in stocks and bonds, and they are moving to a broadly neutral equity position from modestly overweight; in addition, although the S&P 500 is now at their year-end target and is about 20% overvalued, they continue to see stocks as offering relatively superior returns in a low-yield world.
This is one of those half-hearted bearish calls. They are saying things are over-valued, but, heck, ain’t no better place to put the money, so keep the equity allocation high. Interesting what their definition of “neutral” is. For me neutral is whole lot more cash than THAT! It is hard to generate panic and/or selling pressure on this kind of announcement I would think.
Humm… 15% cash for a mutual fund is actually a lot. When all the other mutual funds go this high, then, from a contrary opinion point of view, it might mean that we’re near the bottom.
The allocations described above are recommendations for Morgan’s institutional clients, not mutual funds. I believe mutual funds, in general, are still running on very low levels of cash (4 or 5%??!)
Oh. I misread it then. Then we’re still very very far from the bottom. Resistance. Zero buying power. Low Mutual Fund cash. News saying that “stocks are up”.
We’re going down for sure.