When someone identifies as a bear, normally it means they’re selling. In this market, where anyone who dares do that gets crushed, it just means you’re a little less bullish than everyone else. That’s according to a survey by the National Association of Active Investment Managers, which found that in the current distribution of sentiment, a bear is someone who is 75 per cent invested in stocks. “You hold your nose and you buy,” David Kudla, chief investment strategist at Mainstay Capital Management, said in an interview on Bloomberg Television. “Stocks have been divorced from fundamentals.” Bears are bulls and shorts are long. It’s borne out in earnings season, too, where companies that raise financial guidance are being punished, while those with no profits are surging. Definitions are warping when heavily shorted shares such as GameStop Corp. and Bed Bath & Beyond soar, partly due to interest from day traders who have gathered in Reddit’s WallStreetBets for
Stock exposure among active managers is nearly at all-time highs.
The latest numbers from the NAAIM Investment Exposure survey are out. As a refresher, NAAIM stands for the National Association of Active Investment Managers. These are folks who adjust their investment exposure based upon market risk and their level of bullishness or bearishness. Judging by the latest survey numbers, they are extremely bullish right now. That’s because the average NAAIM manager currently has roughly 113% exposure to U.S. stocks. In other words, the average manager is leveraged long.
If that sounds like a lot, it is. In fact, it is the second highest reading in the 15-year history of the survey, trailing only the week of 12/13/2017. For what it’s worth, the market continue to rally for another 6 weeks following that reading before a sharp, 10-day, 12% drop.
December 22, 2020
Stock market bears get a shot in the arm. A new virus strain is the bad-news catalyst sinking stocks worldwide. Yet, it comes as investor sentiment was quite bullish and positioning was extended. For the last two weeks, Horizon Investments’ Market Notes compiled the ways investors were putting themselves in a precarious position: PIIGS Fly and Other Stories of Investors Reaching for Risky Bets and Record High S&P 500 Ignites Unhealthy Retail Investor Interest. Add to that the record streak of bullish positioning in the weekly survey from the National Association of Active Investment Managers.
Never before has it been above the 100 level for five weeks in a row!