economy
Bank of America says bullishness highest since 2021. So it's time to bail on 'risk assets'
The high level of investor bullishness is a signal to retreat from risk assets and rotate towards less vulnerable investments, the bank said.
TL;DR
- Investor bullishness has reached its highest level in nearly five years, according to Bank of America.
- This sentiment reading, above 8, is considered a sell signal by the bank.
- The bank advises investors to retreat from risk assets and rotate into defensives like consumer staples, REITs, small cap, biotech stocks, and the U.S. dollar.
- Record cash is pouring into markets, with significant inflows into stocks, bonds, and cash.
- Despite outflows from tech and semiconductor funds, tech inflows remain at a record annualized pace.
- Potential warning signs for a shift from stocks to bonds include higher bond yields and a weaker dollar, or rising bond yields alongside falling bank stocks.