So here’s the tea: Fund managers are feeling more confident about the stock market than they have in over three years. And when I say confident, I mean they’re basically throwing their money at stocks like it’s confetti at a New Year’s party.
Bank of America just dropped their latest survey of 238 fund managers, and the results are… well, let’s just say these folks are feeling themselves right now. We’re talking the most bullish sentiment since mid-2021, which if you remember, was when everyone thought the market could only go up (spoiler alert: it didn’t).
But here’s where it gets interesting. These managers have slashed their cash holdings to a record low of 3.3%. For context, that’s like keeping only $33 in your wallet when you usually carry $100. They’re basically saying “cash is trash” and putting almost everything into the market.
Why the sudden confidence? Well, 57% of these managers think the economy will cool down a bit, but only 3% actually expect a full-blown recession. That’s the lowest “we’re doomed” percentage on record. The other 37% don’t think the economy will slow down at all. Talk about optimism.
The survey shows that 29% of fund managers expect corporate profits to rise – the highest since April 2021. Remember that date, because it keeps coming up, and not always for good reasons.
But here’s where these smart money folks show they’re not completely drunk on hopium: They’re worried about two things that could crash this party. First, the AI bubble potentially popping (because apparently even fund managers think some of these AI valuations are getting a bit spicy). Second, something going wrong in the private credit world, which is finance-speak for “a bunch of risky loans might go bad.”
They’re also side-eyeing the Magnificent Seven tech stocks – you know, Apple, Microsoft, Google, and the gang. These have been the market’s darlings, but when everyone’s crowding into the same trade, that’s usually when things get interesting (and not always in a good way).
So what does this all mean for us regular folks? Well, when professional money managers are this bullish and have this little cash on the sidelines, it’s worth paying attention. They could be right about the soft landing and continued growth. Or this could be one of those “famous last words” moments.
The smart play? Maybe don’t follow their lead completely. While they’re going all-in, keeping some cash around isn’t the worst idea. After all, when everyone’s zigging, sometimes it pays to zag. And if history has taught us anything, it’s that when everyone feels this good about the market, that’s usually when you want to start asking “what could go wrong?”
Stay curious, stay diversified, and maybe keep a little more cash than these fund managers are keeping. Just saying.