Andrew Slimmon, managing director and head of Morgan Stanley Investment Management’s applied equity advisors team, believes this is the case.
He says: “Put/call, margin debt, and bear to bull ratios have all swung very negative. According to Lipper, outflows from equities surpassed $90bn year-to-date, the biggest year since 2011.
“And where is the money going? Money market funds. As Sir John Templeton reminded us, ‘bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.’”
I doubt there are many investors who would say they are feeling euphoric at present but, seven years into a bull market, maybe this could well be a prime time to take profits… with a hint of patience on making big wholesale movements.
The problem of course is where else would you place your money, particular for those clients with income requirements?
As Burgess puts it: “With falling gilt yields we find ourselves in the situation where UK equities are yielding four times what a ten-year gilt is yielding.
“It is no surprise that investors chasing a nominal return are therefore turning to risk assets.”
