Surveys can weave a telling narrative
Surveys of investors can provide hints about turning points and trends in the market.
Every survey weaves a narrative. Mr Baker selects consensus expectations for economic growth as a starting point. Whether accelerating or slowing, how does that direction then translate into appetite for risk? One may sometimes see contradictions. In the recent BofAML report, 11 per cent of global panellists expected the global economy to deteriorate over the coming year, the weakest reading since December 2011. Meanwhile, average cash balances have reached their highest level since January 2009.
Notwithstanding, 48 per cent of global panellists believe global equities to be at their most undervalued since August 2011. So why are investors not jumping in feet first to snap up bargains? Survey answers indicate that the panellists are more glum on the outlook for economic growth than about its implications for their investments. “It’s as if they are poised at the cookie jar, hands hovering,” Mr Baker says.
Caveats aside, fund flows serve as a “weighted opinion poll of investors’ opinion,” Mr Moisson concludes – and investors should not necessarily treat them as a worrying sign of “herd behaviour”.
Vanessa Drucker is a freelance journalist