Funds Fear: Shorting Opportunities ahead

Submitted by Marco on 12 April, 2006 - 12:52

Merrill Lynch monthly survey: Bear Market's a Coming Around the Corner with Funds Fearing Economies stretched. Short Opportunity

The Merrill Lynch monthly survey of 216 fund managers, managing a total of $US680 billion of funds have found that global fund managers are starting to worry that the world economy is overheated - which could mean a threat of inflation and higher interest rates. Is this one of the signals that fundamental traders look for to short the market? Ha... On the other hand you have Warren Buffet putting his money on more growth in the future... But you really have to listen to these people - these fund managers move markets when they buy or sell their shares/stock in a company.

26 per cent of fund managers think that monetary policy is still too stimulative. They reckon government policy should slow down the economy more. Time to watch out for shorting opportunities in the coming months... or next couple of years... In the same Merrill Lynch monthly survey, they also found that fund managers were still inclined to believe that equities are undervalued than overvalued despite a 4 per cent rise in stocks between the March and April surveys. And as a result fund managers are putting their money where their mouth is with the net percentage balance overweight cash halved in the past month. Another finding was that there was a significant shift in favour of Japanese equities at the expense of global emerging market stocks. There was also a major improvement in the relative valuation of US equities. The fund managers were overweight on industrials and energy stocks and underweight in consumer discretionary. Pharmaceuticals were seen as the most undervalued sector, while utilities were regarded as the most overvalued.