Wrong-Way Bets Rule U.S. Stock Market's $3 Trillion Recovery
- Mutual funds add cash, volume dries up, shorts get aggressive
- `Skepticism is bullish for risk assets:' OppenheimerFunds
Reluctant Rally Shows Stock Market of Little Faith
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Here’s what happened during the rebound in equities that added nearly $3 trillion to U.S. share values in 10 weeks: mutual funds hoarded cash, short sellers tightened their grip on bearish bets and individuals bailed out of the market.
The divergence between sentiment and prices has been so wide that 2016 is shaping up as the “Year of the Wrong-Way Trade,” beginning with hedge funds that lost the most money in four years betting on momentum stocks. As the S&P 500 soared 15 percent since Feb. 11, investors have all but stopped trading: volume is down 20 percent since the index bottomed.