For the past three years, we have consistently said that the BofA Fund Manager Survey (FMS) is the most incongruous combination of zero signal and ample, schizophrenic noise, a "survey" in which the respondents answer not what they are actually doing, but what they would like to be doing, or failing that, what they think is the right answer even if two consecutive replies may be diametrically opposing and make zero sense taken together (alternatively, it feels like every respondent is a pathological liar and nobody actually tells the truth about what they are doing either out of paranoia or, well, because they are pathological liar).
And indeed, in late August, when looking at the latest batch of 13Fs, Bank of America's Savita Subramanian reached the same conclusion, writing that "BofA’s Global Fund Manager Survey (FMS) reported a shift from negative to neutral on risk assets, with only 1 in 5 respondents expecting an economic hard landing. Tellingly, FMS respondents are most bearish on Utilities, a defensive sector. But LOs and HFs have elevated exposure vs. history, with HFs now 20% net long (a near record). FMS respondents claim neutrality on Banks, but exposure is nearly two standard deviations below avg for LOs and HFs. Despite fading recession concerns, active equity exposure to cyclical vs. defensive sectors and high beta stocks remains well below average." (full report available here to pro subs).
Which is also why we have urged readers to at most spend just a few minutes each month on the cacophonous orgy of noise that is the BofA Fund Manager Survey, which not only has zero signal but has zero correlation to the market. It does, however, correlate to itself and any time sentiment turns overly euphoric or apocalyptic, that's the hint to take the other side in the market. A good example of this was last August, when FMS organized Michael Hartnett said that Wall Street's "Mood Was No Longer Apocalyptic", and therefore he recommended shorting the S&P.
