equities

The latest edition of the Bank of America Global Fund Manager Survey shows that fund managers are still overweight equities while their expectations of future economic growth have fallen sharply.

In fact, the chart below shows that fund managers have never been so pessimistic about growth. Not during Covid and not during the Financial Crisis. The mismatch between expectations and positioning is extreme.

Every year there are surprises at the trade fair, although there seem to have been more in 2021. A surprise is something that the vast majority did not expect. That is the reason why surprises can set a stock market in motion. When almost everyone is convinced of something, it is discounted in the stock prices. These were the biggest surprises of 2021.

In its outlook for 2022, JP Morgan Asset Management makes no bones about the fact that equities remain attractive, even if inflation sticks around a bit longer than expected. In times of inflation and negative real interest rates, equities have almost never given a negative return in the past, according to JP Morgan’s outlook with chief strategist Vincent Juvyns (photo).

“The equity market is moving towards a bubble”, said Jeroen Blokland said during the annual Fondsnieuws Investment Outlook, organised by Investment Officer Luxembourg’s Dutch sister publication. High valuations and exaggerated growth expectations make the probability of corrections in 2022 very high. This statement did not meet with unanimous approval. According to Edin Mujagic, chief economist at OHV Asset Management, this is in fact the ideal environment for equities.