MARKETS SPECTATOR: Terrible advice

Retail investors in the US have been missing out on one of the great bull runs, thanks to professional market strategists who advised them to go underweight equities. If they jump back in, expect another stock surge.

The above chart paints a very interesting picture, both for US markets and locally. The blue line shows that market strategists’ recommended levels of equity holdings fell to a record low in June 2012 just as the market embarked on a monster rally. Strategists recommended allocating 41 per cent of portfolio’s to equities.

The problem is that they were blatantly wrong! Since the beginning of June 2012, the S&P 500 has rallied more than 11.5 per cent, leaving a large percentage of investors watching from the stands as the market took off.


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