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Big money managers are more bullish on stocks than at any time since the COVID-19 pandemic shuttered businesses across the country, according to a new investor survey.
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Bank of America’s proprietary Bull & Bear Indicator, which measures investor sentiment, hit 3.7 on a scale where less than 4 indicates greed and a point greater than 5 indicates fear.
The August Fund Manager Survey was the “most bullish since Feb ’20 but far from dangerously bullish,” wrote Michael Hartnett, chief investment strategist at Bank of America.
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The Charlotte, N.C.-based lender surveyed 181 participants with $489 billion in assets under management between Aug. 7 through Aug. 13.
The strong market has a net 46% of respondents in the camp that stocks are in a bull market while just 35% believe it’s a bear-market rally.
A net 59% thought U.S. technology stocks were the “most-crowded” trade, down from a record 74%, followed by gold at 23%.
As for what could derail the market, a net 35% of respondents said a second wave of COVID-19 infections was the biggest “tail risk,” down from 52% last month. A flare-up in U.S.-China tensions and the U.S. election rounded out the top three at 19% and 14%, respectively.
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An approximately net 70% of respondents thought the Senate flipping to Democratic control was a “risk off” signal that would best be played by shorting health care stocks.
While investors were more bullish on the stock market, which on Tuesday saw both the S&P 500 and the Nasdaq Composite reach record highs, they remained skeptical of a strong economic recovery.
Seventeen percent of respondents, down from 18% in July, expect a V-shaped recovery in the U.S. economy while 37% see a W-shaped rebound and 31% see a U.
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Still, only 53% of investors think the economy is in a recession, down from almost 90% earlier this year. Thirty-one percent of those surveyed say the economy is in an early cycle while a net 79% of respondents, the highest since December 2009, believe the economy will strengthen.
