Bearish Sentiment on Stocks Is Best Thing Rally Has Going for It
- Hedge funds’ cyclical exposure at three-year low: JPMorgan
- Back-to-back quarterly gains seen only twice in 14 bear cycles
This article is for subscribers only.
Skeptics, cranks, disbelievers. The stock market is overrun with them. It may be one of the reasons equities keep rising.
Rarely has the consensus been more uniformly bearish than it is now. Investors are sitting with the lowest allocation to US stocks in almost two decades, have kept cash holdings high for the longest stretch since the dot-com crash and are embracing recession trades more than any time since 2020. And why not? The banking system is stressed, the Federal Reserve pushed forward with another interest-rates increase while recession warnings continued to flare in bonds.