BofA Poll Shows Record Number of Investors Say Stocks Overvalued

A recent Bank of America survey reveals a record 91% of fund managers view US stocks as overvalued, the highest proportion since 2001, following a sharp post-April rally. Despite global equity allocations reaching their highest since February, a net 16% of investors remain underweight US equities, signaling persistent caution regarding domestic valuations.

Analysis

A recent Bank of America survey highlights a historic level of caution among institutional investors regarding US equity valuations. A record 91% of fund managers now view American stocks as overvalued, the highest proportion recorded since the survey began in 2001, a sentiment largely driven by the sharp market rally since April's lows. This bearish view on domestic valuations manifests in investor positioning, with a net 16% of participants reporting an underweight allocation to US stocks. Interestingly, this specific caution contrasts with a broader increase in risk appetite, as overall allocation to global equities has climbed to the highest level since February, suggesting a strategic rotation away from the US market rather than a wholesale de-risking from equities.

Key Decisions for Investors

• Given the record-high bearish sentiment on US valuations from professional managers, investors should critically review their domestic equity exposure, particularly in sectors that have experienced the most significant recent appreciation.
• Consider reallocating capital towards global equities, as institutional flows indicate a tactical preference for non-US markets where relative valuations may be perceived as more attractive.
• Monitor upcoming sentiment surveys and fund flow data closely, as a reversal of the net 16% underweight position in US stocks could signal a shift in market conviction and invalidate the current cautious thesis.