MONEY MANAGER CONSENSUS (Negative Consensus/Bull Market Indicator) Pros gently stepping aside from stocks

August 15, 2014


National Association of Active Investment Managers (NAAIM) released their latest survey of exposure to US equity markets.   (NAAIM Exposure Index)

Source: National Association of Active Investment Managers. The green line shows the close of the S&P 500 Total Return Index on the survey date. The purple line depicts a two-week moving average of the NAAIM managers’ responses.

Source: National Association of Active Investment Managers.

The green line shows the close of the S&P 500 Total Return Index on the survey date. The purple line depicts a two-week moving average of the NAAIM managers’ responses.

The index represents the level exposure to US Equity markets reported by their members. In other words, how confidently are investment managers putting their client’s money into US stocks? According to the survey, the answer is they are not very confident about the US market prospects. The index fell to its lowest level since October 2013. The index fell from 80 in the last survey period to 50.

According to Joe Fahmy of Zor Capital, “the survey tends to be a great contrarian indicator and usually correlates with near-term market lows.”

The hand wringing is getting louder and louder as the Smart Money People are hedging their bets and rightly so. The financial crisis of 2008 caught the Smart Money People off guard and they don’t want to get burned again. Many money managers have decided that they would rather stay on the sidelines and avoid the correction when the money printing by the Federal Reserve truly ends and interest rates trend up.