Low allocations to cash among investors could result in trouble for stocks, said Bank of America in its latest monthly global fund managers survey.
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The average cash held by global fund managers fell to 3.7% in November, triggering a sell signal that has only happened 20 times since 2022. When this occurs, the stock market has historically fallen and underperformed Treasuries over the next one to three months, wrote strategist Michael Hartnett.
AI Bubble Risk Weighs on Stock Market
The survey also noted that investor exposure to stocks is at its highest level since February, creating “a headwind, not tailwind for risk assets.”
Furthermore, 45% of investors believe that an AI bubble is the biggest tail risk to the market and global economy. 53% of investors believe that AI stocks are already in a bubble.
Bank of America’s survey polled 172 fund managers with a combined $475 billion in assets under management between November 7 and 13.
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