This 4-year stimulus/sovereign debt/reach-for-yield bubble continues to set new records for optimism, both in magnitude and duration. Case in point, the latest Barron’s semi-annual polling of money managers:
In our latest survey, 74% of money managers identify themselves as bullish or very bullish about the prospects for U.S. stocks – an all-time high for Big Money, going back more than 20 years.
Meanwhile, just 7% considered themselves “bearish” while none were “very bearish.” (Obviously, we didn’t take the poll.)
Favorite assets classes: equities (86% were bullish) and commodities (50% bullish). Least favorite asset classes: fixed income (89% were bearish), cash (79% bearish), and gold (65% bearish). Basically, they’re all in the economic risk pool.
Despite overwhelming optimism, growth fund manager Robert Lutts of Cabot Money Management seems to feel stocks are climbing a wall of worry:
“Main Street isn’t yet in Wall Street. It is still scared to death. In the past couple of years, the professional money started to flow in. This is just the beginning of new flows that will push indexes even higher. [Lutts expects Dow 17,500 by mid-2014.] I love it when my clients push back. They’re reading the headlines too closely, and coming away with myopic negative impressions. Folks continually underestimate the resilience of the American economy and entrepreneur.”
This is what a bubble looks like: no shortage of delusion thinking.