Investors are riding high on the stock market wave, according to Bank of America’s latest fund manager survey. Cash levels have plummeted to the lowest in 15 years as traders show unwavering faith in equities. However, not all sectors are basking in the glory of this bullish sentiment.
Here are some key insights from the survey:
- Crowded Trades: The "Long Magnificent 7" trade remains a popular choice among 56% of respondents, closely followed by the US dollar and cryptocurrencies.
- Tech Setback: Big Tech, comprising the Magnificent Seven tech stocks, has had a lukewarm start to 2025. Meta (META) is the solitary tech star to outperform the benchmark S&P 500 (^GSPC) with a 20-day rise. Nevertheless, the streak might be nearing its end, with shares dipping nearly 3% on Tuesday.
- Asset Performance: Global equities have emerged as the preferred asset, overtaking US equities. Gold is holding steady in the middle, trading near record highs.
- Risks on the Horizon: Despite the positive outlook, risks loom on the horizon. A global trade war is cited as the top risk by 42% of respondents, with nearly 40% expressing concerns about a recessionary trade war. Other potential risks identified include inflation-driven Fed rate hikes and the fear of an AI bubble.
As investors navigate through the dynamic market environment, it’s crucial to stay informed, diversify portfolios, and assess risks carefully. With this balanced approach, investors can capitalize on opportunities while mitigating potential threats in the ever-evolving financial landscape.
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