Record Number Of Fund Managers Say U.S. Stocks Are ‘Overvalued’

A record number of fund managers say U.S. stocks are “overvalued” and are preparing for a market downturn as stagflation takes hold.
Stagflation occurs when inflation rises even though the economy stagnates. The last time stagflation occurred was in the late 1970s and early 1980s.
However, the latest Bank of America (BAC) global fund manager survey has found that 70% of those polled said they expect stagflation to re-emerge within the next 12 months.
As such, a majority of fund managers are positioning their investments for a market downturn, increasing their allocation to emerging markets and utilities, while reducing allocation to U.S. and European stocks.
Relative to the last 20 years, fund managers today are overweight utilities, bonds, and the Euro currency, and underweight the U.S. dollar, real estate and healthcare stocks.
A record 91% of fund managers say U.S. stocks are “overvalued” and that the Magnificent Seven technology stocks that include Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA) are now the most crowded trade on Wall Street and Main Street.
Fund managers also point out that a growing number of investors are shorting the U.S. dollar as confidence in America fades around the world.
With the benchmark S&P 500 index up 9% this year and just a below an all-time high, a majority of fund managers expect a market downturn in coming months.
Another finding of the Bank of America survey was that just 9% of global fund managers have exposure to cryptocurrencies such as Bitcoin (BTC), as opposed to 48% who have exposure to gold (GLD).
Fund managers who do have crypto exposure, on average, have 3% of their portfolio in digital assets. Most fund managers agree that crypto is being driven by individual retail investors.
Bank of America said 197 fund managers from around the world, who collectively manage $475 billion U.S. in assets, participated in its August survey.
BAC stock is up 4% this year and trading at $46.01 U.S. per share.