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Be Afraid: Active Managers Are Crazy Bullish Lately
By Brendan Conway
Fred Goodwin, State Street’s (STT) “Mr. Risk,” notes today that one closely watched reading of aggressive fund managers’ market sentiment is at “an intergalactic high.”

Which is true. A quick look at the National Association of Active Investment Managers’ weekly survey shows an all-time weekly high a month ago, at an average 104%. 100% means “fully invested.” The measure had only exceeded 100% twice before in data back to 2006 (both during the market top in 2007). The ardor has cooled somewhat during February, but it’s still at just below 83% at last check. (You can download the survey history yourself here.)

Here’s the chart from NAAIM, reflecting the survey since March 2011. Purple is manager sentiment and green is the level of the S&P 500. Click through for a larger image:



In recent years, you might have done well to buy stocks when this group is excessively bearish. You can’t see it in the above chart, but average manager sentiment fell below “zero” just once — meaning managers said they’re invested 100% in cash or market neutral. It happened during October 2008. The same figure was in the single digits during the early 2009 market bottom.

Mr. Risk also has his eye on (among other things) the underperformance of the MSCI Emerging Markets Index this year. iShares MSCI Emerging Markets Index Fund (EEM) is down by about 2% year to date. “In 2000, 2001, 2002, and 2008 EM equities fell in the first two months and went on to post negative yearly returns,” he writes.

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(ZT too)
http://www.marketwatch.com/Story ... 2-B54A-002128040CF6 link 里有图 greedometer


What were the indicators which were flashing red in 1999-2000, just before the collapse, he wondered? What were they showing in 2006-7?

Seymour’s conclusion: There are nine indicators you need to watch. Just nine.

They range from the Volatility Index or “VIX,” a measure in the options market, to the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI), to the amount of stock that insiders are dumping on the market.

He put them all together in a doomsday machine he calls “the Greedometer.” It tells you just how dangerously complacent and carefree the market has become at any moment. See the Greedometer.


The VIX is down. Insider selling is up. Advisers are bullish. Margin debt — the amount investors are borrowing to buy stocks — is nearing the all-time, 2007 peak. And the economy is weakening.


In total, says Seymour, people are now even more greedy, complacent and euphoric and over the top for stocks than they were in 2007. Any individual measure can give a false reading. Throw nine of them together, he argues, and it’s a different story. Since 1999 these nine indicators have given no false alarms, and missed no warnings.

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