Wealthy Investors Continue to Pile into Stocks

By John Del Vecchio and Brad Lamensdorf

Wealth investors are loaded to the gills with equities. This begs the question, how much more can they pile into stocks?
As the chart from Bank of America shows, the equity allocation among private clients has broken out to new highs at 64.3%. This compares to the previous high of 62.5% in 2015 and 56% in April in 2007 just as many stocks were starting to turn down before the financial crisis was at its worst a year and a half later.

Wealthy Investors Continue to Pile into Stocks

The allocation can certainly go higher from here. As the market marches higher combined with excessive optimism, investors will likely continue to plow money into stocks.

However, this is a contrary indicator. It’s highly likely the easy money has already been made.

Not how far we have some from a generational buying opportunity one month before the bottom in 2009. We very may well see a level of 39% again in the future that will once again present a major level of bearishness and warrant aggressive buying.

Hedging remains virtually non-existent.

All the more reason to continue to monitor these trades and build up hedges. Before it’s too late…

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

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