Even as retail investors and hedge funds sour on the stock market, your mutual fund manager may be betting on stocks with a far a larger share of his assets than he has in a very long time.
Mutual fund cash levels dropped to just 3.4% of assets in July — record lows — according to this BoA chart via Pragmatic Capitalism. Presumably, they’re going “all in” on the market, though it could also be partly a function of fund redemptions from their customers.
Says Kevin Duffy:
The fact that Jim Cramer and Larry Kudlow are still employed and bullish is all you need to know from a sentiment standpoint. Ironically, some of these professionals are making the mistake of confusing relative bearishness among individuals as a contrary indicator and reason for optimism. I like to call this the “double contrary,” a rationalization that was quite prevalent during the last market peak in 2007.