Tags: Subramanian | investors | complacent | stocks

BofA's Subramanian: Investors Haven't Turned Overly Complacent on Stocks

By    |   Friday, 27 June 2014 10:45 AM

With the S&P 500 repeatedly rising to record highs, some financial commentators have charged that investors are overly complacent.

Savita Subramanian, chief equity strategist for Bank of America Merrill Lynch, begs to differ.

BofA's Sell Side Indicator survey of Wall Street strategists shows they have a consensus weighting of just 51 percent for stocks, she told reporters, according to CNBC.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000


That indicator doesn't emit a sell signal until it reaches 66.2 percent, according to BofA. In fact, when the indicator is below 54.2 percent, as it is now, it signals a buying opportunity.

"We're now at a point where your average Wall Street firm is recommending you put about half of your money in equities," Subramanian said. "I think that's surprisingly low given that competing asset classes — bonds — don't look particularly attractive."

Stocks are still more likely to go up than down, she argued. "This is far from the level of euphoria that typically precedes a bear market in equities."

Not everyone shares Subramanian's bullishness.

Mark Hulbert, editor of Hulbert Financial Digest, notes that corporate profits slid to 8.8 percent of GDP in the first quarter, the lowest level in almost four years. That's not a good sign for stocks, he wrote in his MarketWatch newsletter.

"Future historians may eventually look back and pinpoint that report as the beginning of the end of this aging bull market," Hulbert noted.

"That's because the first-quarter's decrease could signal the long-awaited return to historically average profitability levels. If so, the stock market will have to struggle mightily just to keep its head above water over the next five years."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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InvestingAnalysis
With the S&P 500 repeatedly rising to record highs, most recently Wednesday, some financial commentators have charged that investors are overly complacent.
Subramanian, investors, complacent, stocks
287
2014-45-27
Friday, 27 June 2014 10:45 AM
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