Bearish Fund Managers

The headline of the Merrill Lynch press release reads: "Merrill Lynch Fund Manager Survey Finds Investors Most Underweight Equities in a Decade."

Merrill releases these surveys periodically and they're usually interesting to tune into. Here's a link to this one: Fund manager survey.

You can imagine what the tone of the release is.

Now I know that I tend to come in on the bullish side a lot, but I can't help but see an interesting bullish lining on this. In short, if fund managers are already the most underweight in a decade, what does that mean for the future? Well, certainly they could get even more underweight equities. However, we could also conclude that a lot of the market's tumble since last October came from this massive pullout from institutional investors. So now they've got all this investor money sitting on the sidelines. I wouldn't suggest that they're going to start reinvesting it even if they don't see a turning economic tide, but what I will say is that when these fund managers do think they see a turn coming, there may be institutional investors tripping over each other trying to get money back into the market.

When does this happen? I don't know. But it'll be an interesting scene when it does.

-AvgJoe