A recent survey has shown that wealthy investors are now seeing an end the the US equity rally. And when we see 20 percent increase in profit growth and $1 trillion dollars in buy backs and the index is up only 3 percent, something tells us that the bull market could be in the very least, overdone and tired.
These are mainly investors with over $1 million invested in a stock brokerage account, who are seasoned investors. Despite making a bold call that the stock rally will end, these investors are not making significant changes to their portfolios. The new report from E-Trade stated that only 9 percent of investors with at least $1 million in their accounts thought that the midterm elections would decrease volatility, and these investors thought that the elections turned out as they expected. The difference of views is that some many investors are cautious but some have suddenly turned bearish, some very bearish.
Now it is unreasonable to think that people will not change their strategies of composition of their portfolios. Clearly some people will hedge and some will likely be moving form stocks to bonds and away form growth stocks. Of course, the move form damaged tech names like Facebook has been a key part of portfolio adjustments for some.
Sure, the US elections and of course the trade tensions between the US and China are key points that market participants must factor in while adjusting positions. Supply chains take 4 years to change, so think about the impact to tech names in 2019 to 2020…..makes sense.
In the survey, 25 percent of investors from this world of 100 wealthy investors said that the end is near and that the stock market bull run if effectively over already. So they are looking for a painful 2019.