Stocks may be at all-time highs but BAML says they're screaming 'buy!'
Investing is simple enough: You buy stocks when they're at low prices and sell them when they're at high prices. Stocks are hitting record highs right now, and although there are few signals of trouble ahead (except maybe China) investors would make out handsomely if they sold down their holdings right now and went on holiday.
Here's how that looks in terms of the S&P 500, charted back to the dot com crash in 1999-2002:
But Bank of American Merril Lynch analyst Michael Hartnett and his team say the indicators they follow show that the markets are mostly screaming "buy!"
In a note to investors last night, BAML's team argues that of five major "fear and greed" signals it follows, three are flashing "buy," a fourth is close to that point, and only the fifth is bearish.
BAML's note is dense with data, so here are highlights from just a few points.
Global equity markets fall below their 200- & 50-day moving averages:
BAML
This survey of investors shows they're holding an unusual amount of cash, over 5.5%, on the sidelines:
BAML
Lastly, BAML notes that there is a historic correlation between investor cash balances and their appetite for risk. But recently, that correlation has fallen apart, and now investors have a high appetite for risk and high cash balances - a perfect scenario if you believe that a bunch of equity-buying is about to happen:
BAML
So, if markets are unusually weak and it looks like a big chunk of money is about to be invested in stocks, it's a good time to put your cash in before all that expected stock market investment pushes up prices.
The only indicator flashing "sell" is the flow of money into emerging market (EM) assets, BAML says. Flows into China's stock bubble have pushed the EM indicator up into "sell" territory.
- I'm an interior designer. Here are 10 things in your living room you should get rid of.
- A software engineer shares the résumé he's used since college that got him a $500,000 job at Meta — plus offers at TikTok and LinkedIn
- Higher-paid employees looking for work are having a tough time, and it could be a sign of a shift in the workplace
- Electric two-wheeler sales crater in April 2024 as prices increase amid reduced subsidies
- Apple clinches strong double-digit growth in India; CEO says incredibly exciting market
- Nifty hits record peak in early trade; Bajaj Finance jumps 6%
- Carbon Credits and Trading
- Rupee jumps 9 paise to 83.37 against US dollar in early trade
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market