2025-12-16 15:12:00
The latest Bank of America fund manager survey is out and it’s concerning news if you’re long stocks. Sentiment is overly bullish.
The survey has been going since 1999 and the allocation to cash at 3.3% is the lowest ever.
Take a look at the history here. We are now well below the “sell signal” threshold of 4% and even below the 3.5% danger zone. BofA notes that historically, when cash drops below 3.5%, the MSCI ACWI tends to return -2% over the next month.
investors have gone ‘all-in’ on the rally and are fully bulled up. The broader sentiment indicator—which combines growth expectations, cash levels, and equity allocation—has ripped higher to its strongest level since July 2021.
For context, July 2021 was right before the market peaked ahead of the painful 2022 bear market. When the crowd is this unanimous on the “growth” narrative, the market becomes incredibly sensitive to any disappointment.
Finally, Allocations to Stocks + Commodities is at the highest levels since early 2022 (another ominous date).
In terms of pure equities, the buying allocation at 42% is the highest since December 2024.
Some other highlights:
- Expectations for global growth at the highest since 2021
- 38% of managers see an AI bubble as the biggest downside risk for markets
- Long Mag-7 remains the most-common allocation
- 69% expect Hassett to be next Fed chair
- 57% say soft landing, 37% no landing & just 3% hard landing.
