Fund Managers as Bearish Now as in 2002

We previously looked at when fading the Pros — going against consensus — is the right call. Its tough to do; Any person who is consistently wrong should be competed out of the marketplace. However, as a group, there is a tendency to catch turning points emotionally, i.e., incorrectly.

I haven’t formed an opinion yet exactly how bullish this is — but it certainly has that flavor . . .

Here’s a few excerpts:

For the first time since April ’01, most fund managers think the corporate profit picture will dim over the next 12 months, according to Merrill Lynch’s Global Fund Manager Survey. About 51% of 293 managers are downbeat on profits vs. 32% who are upbeat. Analysts fear higher oil costs will curb growth. Also, a net 30% are overweight cash, the most since March 2003.

You may recall what happened in March 2003. Here’s Dow Jones take on it:

Global fund mangers are now more bearish on U.S. equities than they have been since 2002, Merrill Lynch said Tuesday, summarizing findings from its monthly fund manager survey. The survey found underweighting of U.S. equities is now as widespread as it was two years ago because of rising oil prices, poor second-quarter earnings performance at many companies and a mounting consensus that China’s economic growth is set to slow.

“Investors continue to have a deep-seated dislike of U.S. equities, and are choosing instead to overweight Japanese equities,” Merrill Lynch analysts David Bowers and Sarah Franks said in a research report. Worldwide, the survey found rising pessimism for economic growth in general, and for corporate earnings growth. Managers became bearish on profit outlook for the first time since April 2001, the study found.

There’s more interesting stuff in this report, and I’ll try to post on the national political aspects of it later . . .

Fund Mgrs Now As Bearish On US As In 2002-Merrill Lynch
Story 3408 =DJ FOCUS: Fund Managers Now As Bearish On US As In 2002
By Sarah Spikes
August 17, 2004

Investors Business Daily
August 18, 2004

Merrill Lynch

Print Friendly, PDF & Email

Posted Under