Show me the Mania

Let’s see if we can reconcile the overwhelming amount of bullishness for US stocks amongst active participants with the incredible amount of pessimism from the rest of the country.

Most professionals and investors who trade their brokerage accounts frequently are bullish right now – the surveys say it as do the fund flows as do the nature of the new bubbles springing up in cloud-related tech stocks and other IPOs.

But most civilians – people who may be invested in the markets but do not pay attention or care – are still more fearful than they are excited.

How do we know? Let’s not look at what they tell the pollsters, let’s look at what they are actually doing…

According to the nation’s largest asset manager, BlackRock, with some $4 trillion in assets, a majority of people are not reveling in the all-time highs we’re seeing stocks. In fact, a great many of them are ignoring it entirely.

Despite steady gains in recent years that have pushed some stock markets to all-time highs, most people are not comfortable taking on more risks to achieve better returns, according to the global survey — one of the largest ever, spanning 17,567 investors including 4,000 Americans, across a range of income levels…

While affluent investors (those with more than $250,000 in investable assets) expressed greater confidence about their financial futures, even they – along with investors of all types around the world — tend to hold a lot of cash, with no immediate plans to change their investment mix. In the U.S., investors of all types held 48% of investable assets in cash, with 18% in stocks and 7% in bonds.

48% cash, 7% bonds, 18% stocks.

I should tell you that during the late 1990’s, stocks and stock mutual funds were 40% of US household net worth, according to data from the Federal Reserve – more than double the current totals. The 18% number we see today is actually closer to the 16.5% number registered at the bottom of the secular bear market in 1982.

Show me the mania.


BlackRock Global Investor Pulse Survey: Five Years after Crisis, Many Investors Still Shun Risk (WSJ)

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