By one old gauge, this is a better time to buy stocks than the Covid panic or the depths of the 2008 crisis. That's the University of Michigan consumer survey. It bottomed in April 1980, October 1990 and November 2008, and each of those turned out to be a good time to buy. Its top came in January 2000, which turned out to be the time to sell tech. Last week's reading would be the second-worst ever. The Journal's Spencer Jakab doesn't trust it anymore, and he has a better one.
The consumer survey broke when it turned partisan. Each party's mood now flips with the White House, so the headline number says more about politics than money. Jakab points instead to Bank of America's Global Fund Manager Survey, released on Tuesday, Oct. 13 by chief investment strategist Michael Hartnett. It asks professionals what they expect and what they own. The useful readings come when too many of them line up on one side.
They're lined up now. The share of managers expecting a boom is the highest since February 2022. That was the first month of the last bear market, and the Fed started raising rates the month after. Managers are the most overweight tech since the summer of 2020. Four years ago they were heavily underweight tech, right before ChatGPT set off the current run. Average cash has dropped to 3.9%. Hartnett tells clients to sell global stocks when cash falls below 4%. His Bull & Bear Indicator reads 8.1, and his sell level is 8. Friday's paper corrected the sell lines and the indicator reading, and we use the corrected figures here.
The fear that already showed up
Jakab finds one ray of light. The managers' biggest worries tend to vanish from the headlines fast. The 2013 fiscal cliff, a 2016 China hard landing, Covid, the breakup of the EU, a tariff recession. None of them stuck. Their newest top fear is a disorderly rise in bond yields. That one showed up the day before the column printed. On Wednesday, Oct. 14 the 10-year Treasury yield touched 5.329% after a hot inflation report. The chip index fell 4.30% and the Nasdaq had its worst day since July.
Our read
This is Behavioral, with Investments/Risk · IN04 underneath. We treat survey readings the way we treat prediction markets. They're crowd prices, not forecasts. A crowd this sure of a boom, this heavy in tech and this light on cash has often been late. That doesn't mean sell. It means don't chase. Our September letter set three conditions for new money, and none of the three passes this week. Core inflation came in at 0.3% for September, the Fed raised in September, and the volatility measures we watch jumped after Wednesday's report. So we bought nothing. The tech names stay held at weight, Nvidia (NVDA) in 31 books, Microsoft (MSFT) in 29, Alphabet (GOOGL) in 28, with Treasury bills and gold as ballast.
Your own version of the fund-manager survey is the top line of your 401(k) or 403(b) statement. After two years of tech gains, the stock slice has likely drifted past the number you picked. This week's check is to pull that statement and compare the stock-versus-bond split to the target you wrote down when you set the account up. If your target was 60% stocks and the statement says 70%, the market rebalanced you without asking. Many plans have a one-click rebalance button that puts it back. It's the quiet move that keeps you from becoming the crowd in this survey. You tighten the lid before the jar tips, not after it spills. If the target itself needs a second look, that's a conversation we'd welcome in a review.