Wall Street guru Ed Yardeni urged investors to be more cautious in the seemingly endless bull market.
“Right now, there's just way too much bullishness. Everybody's bullish. And we have signs of speculative excess with Tesla and with some of these IPOs. So, I think you want to be a little bit careful,” Yardeni Research’s president and chief investment strategist told Yahoo Finance.
“We already had our Santa Claus rally. It just happened in November. Maybe we'll get two this year. Maybe we'll get another one before the end of this year in December,” said Yardeni, also a Newsmax Finance Insider.
“But I think at this point, don't speculate too much. Just stick with quality names, broaden out. The outlook is actually pretty good for next year once we get through this pandemic, once a lot of us get inoculated. We should see the economy doing very well in the second half of next year going into 2022. That's what the market's been discounting. The market does look forward. And it's actually done a very good job of anticipating a V-shaped recovery in the economy so far,” he said.
“But the economy is slowing because of the third wave of the pandemic. And you have to factor all that in when you're managing a portfolio these days.”
Meanwhile, optimistic about a return to economic growth, fund managers have been slashing their cash positions and embracing risk assets to an extent that’s raising red flags for strategists at Bank of America Corp.
Money managers overseeing $534 billion in total are underweight cash for the first time since May 2013, with levels down to 4%, according to a BofA survey that took place Dec. 4 through Dec. 10, Bloomberg reported
Investors are the most bullish on stocks and commodities -- the so-called “risk-on” assets -- since February 2011, while the Bitcoin rose in the list of the most crowded trades, according to BofA. The plunge in cash exposure is setting off the broker’s sell signal for equities.
“Investor sentiment is bullish as vaccine hopes induce strong ‘buy the reopening’ trade,” said BofA strategists led by Michael Hartnett in a note. “We say sell the vaccine in the first quarter 2021.”
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