Fear of missing out on a rally replaces recession worry in the most widely watched investor poll

  • Bank of America Merrill Lynch’s regular survey of global fund managers finds investors have traded fears of recession for the “fear of missing out.”
  • The investment bank’s latest survey of global fund managers found that cash levels posted their largest decline since President Donald Trump’s 2016 election.
  • “The bulls are back…global recession concerns vanish and ‘Fear of Missing Out’ prompts wave of optimism and jump in exposure to equities,” BofA writes.

Portfolio managers who spent much of the summer worried about an impending recession are now instead afraid of losing out as the stock market heads for record highs, according to a widely followed survey conducted by Bank of America Merrill Lynch.

The investment bank’s latest monthly survey of global fund managers found that cash levels posted their largest decline since President Donald Trump’s 2016 election to 4.2% from 5% as investors rushed to take on risk. Cash on hand is now at its lowest level since June 2013.

Michael Hartnett, chief investment strategist at Bank of America, also said that manager global growth optimism surged by the most in 20 years to 18-month highs, a sign investors expect better manufacturing and profit numbers worldwide.

“The bulls are back…global recession concerns vanish and ‘Fear of Missing Out’ prompts wave of optimism and jump in exposure to equities & cyclicals,” Hartnett wrote in a note to clients. “We say…easy part of rally over, tougher part of rally beginning…but rally it can as no ‘excess greed,’ there is ‘excess liquidity’ (and trade/fiscal easing), and corporate earnings set to accelerate.”

“FOMO” or fear of missing out, is a commonly used term among traders to describe herding behavior by investors when the market starts to gain rapidly.

Investors still said “trade war” is the No. 1 trail risk to a rebound in equities, but bulls noted that a “trade truce” might be enough to keep stocks grinding higher to records, the strategist said.

www.cnbc.com/2019/11/12/fear-of-missing-out-has-replaced-recession-concerns-bofa-survey-finds.html